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MS

Michael Seibel

12/17/21

@ Y Combinator

When an investor expresses interest in your company contingent on finding a lead, they are essentially getting a free option to invest later without commitment.

Video

YC

Understanding Investor Terms & Incentives || Rookie Mistakes with Dalton Caldwell and Michael Seibel

@ Y Combinator

Understanding Investor Terms & Incentives || Rookie Mistakes with Dalton Caldwell and Michael Seibel

12/17/21

Related Takeaways

MS

Michael Seibel

12/17/21

@ Y Combinator

When an investor says, 'Come back when you find a lead,' it often means they are not interested in investing at that moment.

MS

Michael Seibel

12/17/21

@ Y Combinator

If you find a lead investor, the lead often wants to invest the entire amount to meet their ownership target, which can limit your options.

KN

Kirsty Nathoo

10/17/18

@ Y Combinator

The lead investor in a priced round typically negotiates the creation of an option pool for new employees, which can dilute existing shareholders but not the new money being invested.

MS

Michael Seibel

11/29/18

@ Y Combinator

Having a couple of customers can significantly increase your leverage when talking to investors, making them more interested in your startup than if you only have an idea.

GR

Geoff Ralston

10/11/18

@ Y Combinator

When you offer a convertible note, you're selling a promise of equity rather than actual equity in your company.

MS

Michael Seibel

11/29/18

@ Y Combinator

When you don't need investment, investors often come back wanting to provide more funding, which highlights the importance of leverage in business.

YC

Y Combinator Cast

12/17/21

@ Y Combinator

For tiny startups, investors may not fund them anyway, so it's important to say what they want to hear to capture their interest for future opportunities.

YC

Y Combinator Cast

10/29/22

@ Y Combinator

YC companies often receive numerous inbound offers from investors, contrasting with the common experience of founders who typically have to reach out to investors themselves.

YC

Y Combinator Cast

12/17/21

@ Y Combinator

Investors often say they want to see a job offer from Google or Apple before making a commitment, but this is usually just a way to say no without being direct.