Helping Entrepreneurs Succeed: Naval Ravikant (Fundraising)

by Scott Edward Walker on June 26th, 2011

To Our Clients & Friends: Welcome to our weekly series entitled “Helping Entrepreneurs Succeed.”  Each week, we share a favorite video of a successful entrepreneur, investor or business leader on a variety of topics.  This week, we are sharing a bonus video: the first keynote address at the 7th Founder Showcase in San Francisco entitled “The Anatomy of a Fundable Startup,” presented by Naval Ravikant.  This is the bookend to Mark Suster’s address, “Getting Funded in a Frothy Market” (which we posted on Friday).

Naval is a very smart entrepreneur and investor, and the co-founder of Venture Hacks and AngelList.  Like Mark’s speech, this speech is a little longer than most of our videos (30+ minutes), but well worth watching in its entirety.  Indeed, it is chock full of solid nuggets, including the following:

“The funding market is extremely bifurcated.”

“It’s become so cheap to start a company that everyone has.”

“Rather than doing everything pretty well, do one thing great.”

“Traction trumps everything.”

“Who you are matters more than almost anything else.”

“Unfortunately, location does matter.  If you want to get funded, you want to be in Silicon Valley or New York.”

“Seed stage investing is a people business – so you have to be local; you have to be connected; you have to know each other and meet each other physically.”

“There’s not a lot of room for non-technologists.”

“Sole founders tend not to get funded well….There are, of course, exceptions.”

“You only want to recruit the best of the best people. If you can’t recruit them, you are not ready.”

“You want to be very up-front about product development; make sure you have something to show – a carrying-card that is a real product.”

“Show, not tell.”

“It’s better to find [a product] that is hard to do.”

“Always expect competition.”

“Know your micro-economics.”

“Whatever your core metric is you want to try to increase that by 20% per month if you want to look like a so-called hot company.”

“The best forms of referral or social proof are other entrepreneurs who they have backed before or investors who have committed in your round.”

“It makes sense sometimes to break your round into two pieces and do a little advisory round – a small amount for people who you really want involved; and then do a bigger-money round.”

“It’s easier to raise money in this environment if you’re issuing equity instead of notes.”

“If you’re having a hard time raising money – if you’ve been at three to six months in this environment– it’s probably not a good idea to just keep trying to get more investors; it’s time to go back and focus on your product or your team.”

“It’s really important to have a lead investor.”

“In the ideal seed round, half of it is done by a single investor who you trust…and the rest of it is filled-out by people you want involved.”

I hope you enjoy it.  Cheers, Scott

7th Founder Showcase – Naval Ravikant Keynote from Founder Showcase on Vimeo.

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