Thoughts about Silicon Valley from the perspective of an early stage investor, entrepreneur and mentor.

1. FUNDRAISING IN SILICON VALLEY – PLUS A FEW
RANDOM THOUGHTS. ARIEL POLER

2. Ariel’s Background
 Founder: IPRO, Topica, Textmarks & Best of Angel.
 Board Member: Kana,
LinkExchange, Freedom Financial, Odeo,
StumbleUpon, LOLapps, Strava.
 Investor:
AdMob, Flixster, Slideshare, Xobni, RockYou, Outright,
BrightRoll, Instructables, Causes, VivaReal, Optimizely, Rally,
Scan, Thumbtack, Viki, Pantheon, Groupspaces, Mashery,
StumbleUpon, Kongregate and NexTag.
 Personal: MIT (math), Stanford (mba), San Francisco (home).

3. Silicon Valley is Another Planet
It is not the US. It is not California. It does include San
Francisco.
Company formation, financing, growth and sale have
been “systematized”.
Tons of talent and resources – but even more demand for
it - so you have to fight and pay up for it (salaries, rents,
lawyers, parking…)

4. Recent Trends
 LOTS of new angels & seed investors in general. It is a LOT
cheaper to start a company today – particularly consumer
Internet.
 Entrepreneurs have a lot more leverage than 5+ years ago…
But
 Series A & B are harder
 Marketplaces (uber, airbnb, Kickstarter, TaskRabbit) and
social/specialized ecommerce (Fab, Warby Parker) are hot
areas. And of course everything mobile/tablet.
 Platforms such as AngelList, Founders Club and Gust are
changing the seed landscape

5. International Companies have better
chances of fundraising elsewhere
• Silicon Valley is the only region with too many good deals.
Investors elsewhere HAVE TO invest outside their region,
but we don't. So the bar is much higher...
• So non Silicon Valley companies might be better of
fundraising in places such as London, New York or Boston.
• Of course, a few Silicon Valley investors are investing in
Brazil…

6. It is not a Black and White distinction
between Angels, VCs, Private Equity
There are many shades of Grey...
-Full time professional angels.
-Angels with funds.
-VCs that focus on seed investments.
-VCs that participate in seed rounds.
-VCs with Private Equity growth funds
What matters most is the individual, not the firm!
Do your homework to identify the best possible people.

7. Don’t believe what you Read
Most success stories are made with 20/20 revisionist
hindsight
It often takes time, e.g. StumbleUpon and Twitter were
not overnight successes as some people think…
20/20 Hindsight gives great strategic vision. Realistically,
successes are built incrementally.
 So, don’t obsess over your world domination vision. Just
make sure you have a vision for a small success – from which
you will be able to build a larger one.

8. "You are too early” and other excuses
Most investors do deals when they get excited by them. But
they don't like to say “I am not excited", so instead they use an
easy excuses, such as:
- You are too early
- The deal is too small
- I want to see more customers/revenues/technology
Be careful about trying to solve address their excuses, because
once you do they are likely to find others. Instead, figure out
how to get them excited.
Investors like to keep their options open.

9. On "average", It takes 6 Months...
But averages are often meaningless
"Hot deals" are done in a few weeks, sometimes a few
days
Many deals never get done.
And somehow the average is 6 months...
The best thing you can do to increase the odds of a
successful financing is to move your business forward. Be
careful about spending tons of time fundraising.

11. Speed is overrated!
What good is going fast in the wrong direction?
The better you understand where you need to go, the
faster you can move
But, never stand still!
If you have money you will spend it… Get it when you
know how to use it

12. You can’t literally follow all
the advise that you get
There are many ways of building companies
You must find the approach that works for you
Advise should help you gain insights and to experiment
It is the same for competitive athletes…

13. Focus on your most
important market from the
start
Be careful about starting with the “local” market as a
stepping stone to a larger market... You might get stuck
there and never quite make it to the larger markets
If you want to be a global player, focus on a large
market from the start

14. Hire Slow & Fire Fast
The moment you start thinking someone might not be
working out, he/she most likely isn’t
 But letting someone go is difficult and painful for everyone,
so…, take your time hiring.
 Same goes for co-founders, service providers, and others.

15. Moving to Silicon Valley?
 PLUSES:
 The “center of the universe”
 Money
 Experts
 Partners
 Customers in some cases
 A “must do” in some spaces
 MINUSES:
 Much harder to hire talent
 More expensive?
 MIDDLE GROUND:
 Come for a while - or come frequently
 Send some of your team

16. Help me Help You
Do your homework
 The right people to talk to
 The topics you want to discuss
Be Specific
Add value

17. Questions?
http://bestofangel.com
@ariel