What’s the best way to create your financial strategy?

Reid Hoffman (Partner & Co-Founder at Greylock Partners)
LinkedIn’s Series B Pitch to Greylock: Pitch Advice for Entrepreneurs

Always think about the next round. The usual tempo for raising money from venture capital is at a minimum of a year between financings. Every time you raise a round, you should be thinking about the next round. Who will be the next investors you pitch? What will their concerns be? What will you need to solve next? How will you raise money later?

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
Maximizing Runway Can Minimize Success – AVC

To my mind, maximizing runway is not the game startups should be playing. Getting somewhere fast is the game they should be playing. You can always raise more money if you are doing well on the metrics that matter in your business. So focus on that and runway will take care of itself. If you can get the plane to take off, the length of the runway matters less. If you can’t, there is no runway long enough for you.

Fred Wilson (Co-Founder and Partner at Union Square Ventures)
Bootstrapping – AVC

None of this is to suggest that going the accelerator, seed, angel, or some other more fashionable route is a bad idea. They all work just fine. And we are investing in plenty of companies that choose that route. But for some reason our firm is drawn to the bootstrapped model, and increasingly so.

Seth Godin (Founder at Yoyodyne Entertainment)
Seth’s Blog: What investors want

Assets (buildings, machines, powerful brands, new technologies) are less essential than ever before. For many organizations, a laptop is worth more than a building or a punch press. That’s great if you’re getting started, because the connection economy has made the cost of entry lower than ever before. It also means, though, that the easy-entry business you’re in might not respond well to the investor’s money. If there isn’t an asset you can buy… (read more)

Paul Graham (Co-Founder & Partner at Y Combinator)
Startups in 13 Sentences

Spend little. I can’t emphasize enough how important it is for a startup to be cheap. Most startups fail before they make something people want, and the most common form of failure is running out of money.

Paul Graham (Co-Founder & Partner at Y Combinator)
Startups in 13 Sentences

Get ramen profitable. “Ramen profitable” means a startup makes just enough to pay the founders’ living expenses. Once you cross over into ramen profitable, it completely changes your relationship with investors. It’s also great for morale

Mike Maples Jr (Managing Partner @ FLOODGATE)
Ron Conway, Mike Maples Jr. – Angel Investing Revealed by Stanford eCorner | Free Listening on SoundCloud

Prove something dramatic while you have six months of cash [in the bank]

Naval Ravikant (Founder, CEO & Co – Maintainer at AngelList)
Anatomy of an (un)fundable startup – Venture Hacks

“If you can’t generate traction, do you really want to raise money?” “If you need money to recruit the best, you’re not ready. ”

Reid Hoffman (Partner & Co-Founder at Greylock Partners)
LinkedIn’s Series B Pitch to Greylock: Pitch Advice for Entrepreneurs

People frequently think the most fundamental strategy of a startup is its product strategy. In fact, the most fundamental strategy is the financing strategy. If your company runs out of gas (finance), your company will die no matter how good your product strategy is.

Paul Graham (Co-Founder & Partner at Y Combinator)
Default Alive or Default Dead?

No matter how good your growth is, you can never safely treat fundraising as more than a plan A. You should always have a plan B as well: you should know (as in write down) precisely what you’ll need to do to survive if you can’t raise more money, and precisely when you’ll have to switch to plan B if plan A isn’t working.

Mark Suster (Managing Partner at Upfront Ventures)
Founder Showcase – Mark Suster Keynote on Vimeo

If you want to raise capital from professional money 9 months from now, six months from now, four months from now — get going now. You’ve gotta build relationships with these people.

Paul Graham (Co-Founder & Partner at Y Combinator)
How to Raise Money

And the right strategy, in fundraising, is to have multiple plans depending on how much you can raise. Ideally you should be able to tell investors something like: we can make it to profitability without raising any more money, but if we raise a few hundred thousand we can hire one or two smart friends, and if we raise a couple million, we can hire a whole engineering team, etc. Different plans match different investors. If you’re talking to a VC… (read more)

Paul Graham (Co-Founder & Partner at Y Combinator)
How to Raise Money

Be profitable if you can. You will be in a much stronger position if your collection of plans includes one for raising zero dollars—i. e. if you can make it to profitability without raising any additional money. Ideally you want to be able to say to investors “We’ll succeed no matter what, but raising money will help us do it faster. “

Sam Altman (President at Y Combinator)
Fundraising Advice for YC Companies – Y Combinator Posthaven

I’d close the first, say, $200k from the first reasonably good investors that offer it on reasonable terms–say a $5 million pre-money valuation or higher. This removes some uncertainty and pressure, gives you capital to execute with while raising the rest of your round, puts you in a stronger position, etc. It’s worth a discount for all of this. Beyond that, I’d then collect interest from investors. Then, after a set number of weeks you decide… (read more)

Mark Suster (Managing Partner at Upfront Ventures)
So What is The Right Level of Burn Rate for a Startup These Days? | Bothsides of the Table

Talking about existing investors is one way of talking about “access to capital” because if you already have VCs then you have “access.” And then you’re just assessing whether you can get access to new VCs or whether your existing VCs can help you in tough times.

Mark Suster (Managing Partner at Upfront Ventures)
So What is The Right Level of Burn Rate for a Startup These Days? | Bothsides of the Table

Are Your Existing Investors Over Their Skis? We invest about half of our fund in our initial investments and we “reserve” about 50% of our investments to follow on in our best deals. If we have [already] committed $10 million and if you don’t have 3 other investors around the table and if you’re burning $800k / month (implying you need $10 million more to fund one-year’s operations or nearly $15 million to fund 18 months) – we’re simply “over our… (read more)

Seth Godin (Founder at Yoyodyne Entertainment)
Seth’s Blog: Why scale?

Investment costs money and it wants a return. But your customers don’t care about that.

Use capital wisely, because sooner or later, you work for it, not the people you set out to serve or the market you sought to change.