YC just published a 70-page Series A guide so founders don’t tank their own prospects
0Reported today on TechCrunch
For the full article visit: https://techcrunch.com/2020/02/26/yc-just-published-a-70-page-series-a-guide-so-founders-dont-tank-their-own-prospects/
YC just published a 70-page Series A guide so founders don't tank their own prospects
This morning, Y Combinator is publishing a 70-page Series A guide based on its work with 190 YC companies over the last couple of years. It's part of an initiative launched in 2018 to help these alums understand how Series A rounds work - and how to make them work to their advantage.
The program is led by YC partner Aaron Harris, with whom we talked at the program's launch and who we caught up with again earlier this week to find out what's in the guide, and why - given the many related posts that YC publishes on a regular basis - the outfit felt the need to put something so massive together. Excerpts from that chat follow.
TC: You've been working expressly with companies on their Series A rounds for a couple of years. What are some of the misconceptions around how to land these financings?
AH: I had this idea that Series A rounds were understood on the investor side - that they are looking for ARR, plus profit, then comes funding. But the metrics that people like to talk about, they're really meaningless. We've seen companies funded with $200,000 in ARR and companies funded with $9 million in ARR. It's really fundamentally a bet on what the investor thinks the future looks like based on the founder and what the business is doing at that point. It's entirely possible to raise on a great story and no metrics, versus great metrics and no story.
TC: If you don't need to reach a certain financial threshold, then how do you know when it's time to reach out to Series A investors?
AH: There's a lot of preparation required [before doing this]; we advise against companies going out to market because of a false signal. Sometimes, an investor wants to give a t