YC
Startup Experts Share Their Investor Horror Stories
@ Y Combinator
08/18/23
Takeaways
YC
Y Combinator Cast
08/18/23
@ Y Combinator
Raising money is a game that requires strategic thinking, as meetings can often go terribly wrong, leading you to question your purpose in running a company.
YC
Y Combinator Cast
08/18/23
@ Y Combinator
The worst investor meeting can leave you feeling like you no longer want to pursue your business.
YC
Y Combinator Cast
08/18/23
@ Y Combinator
In one of my worst investor meetings, I was kept waiting for hours by an investor known for making founders wait, which set a negative tone for the meeting.
YC
Y Combinator Cast
08/18/23
@ Y Combinator
During the meeting, the investor was eating lunch, had his shoes off, and even smoked a cigarette in the office, creating a bizarre and uncomfortable atmosphere.
YC
Y Combinator Cast
08/18/23
@ Y Combinator
This investor's behavior felt like a power play, and ultimately, he did not invest, making the experience even more frustrating.
YC
Y Combinator Cast
08/18/23
@ Y Combinator
The financial world often operates on status games rather than the truth of product problems and the ability to create, but this is beginning to shift.
YC
Y Combinator Cast
08/18/23
@ Y Combinator
The best founders in the future will choose builder-focused venture capitalists, as the status games played by some VCs will no longer be effective.
YC
Y Combinator Cast
08/18/23
@ Y Combinator
In a meeting with a famous VC, the investor wasted time asking about my co-founder’s Chinese language skills instead of focusing on our business pitch, which felt inappropriate and frustrating.
YC
Y Combinator Cast
08/18/23
@ Y Combinator
When investors prioritize language lessons over business discussions, it’s usually a bad sign for the pitch's outcome.
YC
Y Combinator Cast
08/18/23
@ Y Combinator
As a founder, it's important to believe the 'no' from investors but not necessarily the reasons behind it, as they often lack transparency.
YC
Y Combinator Cast
08/18/23
@ Y Combinator
A great investor respects your time, responds quickly, and adds value, while many investors fail to meet these standards.
YC
Y Combinator Cast
08/18/23
@ Y Combinator
It's challenging to identify a great investor, especially for early-stage founders who often have limited options.
YC
Y Combinator Cast
08/18/23
@ Y Combinator
Founders should seek investors who regularly invest in startups and respect their time, while also preparing for a longer fundraising process than expected.
YC
Y Combinator Cast
08/18/23
@ Y Combinator
YC helps shift the leverage back to founders, making it easier for them to connect with investors who treat them well, despite the fundraising process still being unpredictable.
YC
Y Combinator Cast
08/18/23
@ Y Combinator
Remember your purpose for raising money: to manifest your dream, and set realistic expectations based on past experiences shared by others.
YC
Y Combinator Cast
08/18/23
@ Y Combinator
I flew to Chicago for a meeting, but none of the partners were there, just associates without check-writing power. I gave a terrible pitch and there was zero interest in investing. You need to have a game plan for meetings, and I was completely unprepared.
YC
Y Combinator Cast
08/18/23
@ Y Combinator
Investors want to understand how your situation fits into the broader strategy of your company. They won't just give you money because of a market event; you need to be organized and clear about your value proposition.
YC
Y Combinator Cast
08/18/23
@ Y Combinator
A good investor is someone who makes decisions quickly, signs documents promptly, and wires money without needing to be involved afterward. If you only have A-minus investors, you'll be fine, but you want to avoid those who create distractions and busy work.
YC
Y Combinator Cast
08/18/23
@ Y Combinator
YC has an investor database where founders provide feedback on investors they've worked with. This helps encourage good investor behavior and serves as a valuable resource when deciding whom to prioritize for funding.
YC
Y Combinator Cast
08/18/23
@ Y Combinator
During demo day, founders often have a list of interested investors, allowing them to choose who to engage with. This gives founders more control over their fundraising process, which is crucial since many dislike fundraising.
YC
Y Combinator Cast
08/18/23
@ Y Combinator
Fundraising should not be the primary focus; instead, founders should concentrate on building their product and engaging with users. Money is just a tool to help grow the business, not the end goal.
YC
Y Combinator Cast
08/18/23
@ Y Combinator
Great investors not only stay out of your way but also provide more capital and connections for future rounds. This happens when they are genuinely good investors and you keep them informed about your progress.
YC
Y Combinator Cast
08/18/23
@ Y Combinator
Every investor meeting is as much about them interviewing you as it is about you interviewing them. It's a two-way street, and if an investor's style doesn't fit with yours, it's okay to move on.
YC
Y Combinator Cast
08/18/23
@ Y Combinator
Having a bad investor can be worse than not having a great one. A bad investor can hurt your company in many ways, so it's crucial to choose wisely and avoid those who could be a net negative.
YC
Y Combinator Cast
08/18/23
@ Y Combinator
We should have done our research to answer the crucial question: who is the CEO? When we said both of us, it ended the meeting immediately.
YC
Y Combinator Cast
08/18/23
@ Y Combinator
A good investor wants to know who they are actually working with, and it's essential to have a single CEO to avoid confusion.
YC
Y Combinator Cast
08/18/23
@ Y Combinator
It's important to prepare for investor meetings by understanding who you're meeting with and what they value, as this can prevent awkward situations.
YC
Y Combinator Cast
08/18/23
@ Y Combinator
Investor meetings are a two-way street; both parties should come prepared and professional to foster a productive conversation.
YC
Y Combinator Cast
08/18/23
@ Y Combinator
The goal of fundraising is not just to raise money but to create an incredible business. Don't let investor feedback dictate your self-worth or the value of your startup.
YC
Y Combinator Cast
08/18/23
@ Y Combinator
Founders should prepare for investor meetings by expecting negative feedback and being ready for tough questions, which helps avoid discouragement.
YC
Y Combinator Cast
08/18/23
@ Y Combinator
There's a fine line between adjusting your pitch based on investor feedback and compromising your product vision, which can lead to a mismatched offering that no one wants.
YC
Y Combinator Cast
08/18/23
@ Y Combinator
The purpose of your startup is to solve real problems, not just to raise money or gain status. Stay focused on creating value for your customers.