VC signaling in seed rounds

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VC signaling in seed rounds

  1. 1. ✌ VC signaling in seed rounds Venture Hacks
  2. 2. Outline: VC signaling in seed rounds 1. VC signaling in seed rounds 2. Chris Dixon bio 3. Mark Suster bio 4. Naval Ravikant bio 5. 3 guests, 3 different types of funds 6. What stages of investment does a startup go through? 7. The $ amount in a round changes based on the public markets 8. Seed investors make decisions quicker and ask for less control with simpler documents 9. The cast of characters you run into when you're raising money 10. What is VC signaling?
  3. 3. Outline: VC signaling in seed rounds 11. VC signaling is when insiders convey information through their actions 12. Investors aren't the only insiders who can signal 13. VC signaling is the action or lack of action of people who have information you don't have 14. Investment decisions are often influenced by social proof and momentum 15. Social proof short-circuits investment decisions 16. Social proof is rational 17. How do investors transmit signals? 18. Typical investor signals 19. When signaling matters
  4. 4. Outline: VC signaling in seed rounds 20. All VCs talk to each other — you can't keep them apart 21. If you hear 5-6 people passed, you're predisposed not to like it 22. 4 types of investor signals 23. In the good old days, supportive investors would always do their pro rata 24. Supportive investors still tend to do their pro rata in the Series B 25. Funds can establish norms and stick to them 26. Does GRP have a follow-on policy? 27. Do early stage funds do selective follow-on rounds? 28. There's a difference between focused seed stage investing by VCs and shotgun seed investing by VCs 29. Don't give VCs contractual options on your next round
  5. 5. Outline: VC signaling in seed rounds 30. Taking office space can also be a signal 31. If my existing investors don't want to invest, how do I talk my way out of it? 32. Does a VC work against you in the Series A if they don't buy enough of the company in the seed round? 33. What are the pros of taking seed money from a VC? 34. Anything I missed that I should have brought up? 35. How to take an option-style investment from a VC 36. What's your favorite blog these days? 37. What's your favorite life hack these days? 38. Get intros to seed investors with AngelList
  6. 6. VC signaling in seed rounds
  7. 7. Chris Dixon cdixon.org @cdixon
  8. 8. Mark Suster bothsidesofthetable.com @msuster
  9. 9. Naval Ravikant startupboy.com @naval
  10. 10. 3 guests, 3 different types of funds
  11. 11. What stages of investment does a startup go through?
  12. 12. The $ amount in a round changes based on the public markets
  13. 13. Seed investors make decisions quicker and ask for less control with simpler documents
  14. 14. The cast of characters you run into when you're raising money - Individual angels - Individual angels investing OPM - Seed stage funds - Multi-stage funds
  15. 15. What is VC signaling?
  16. 16. VC signaling is when insiders convey information through their actions
  17. 17. Investors aren't the only insiders who can signal
  18. 18. VC signaling is the action or lack of action of people who have information you don't have
  19. 19. Investment decisions are often influenced by social proof and momentum
  20. 20. Social proof short-circuits investment decisions
  21. 21. Social proof is rational
  22. 22. How do investors transmit signals?
  23. 23. Typical investor signals: - Lead the round - Do pro rata - Do nothing
  24. 24. When signaling matters - 10% company is hitting it out of the park and signaling doesn't matter - 80% of the time the company is middling and signaling *matters* - 10% of the time the company is a disaster and signaling doesn't matter
  25. 25. All VCs talk to each other — you can't keep them apart
  26. 26. If you hear 5-6 people passed, you're predisposed not to like it
  27. 27. 4 types of investor signals: - Insider tries to do the whole round - Do a little more than pro rata - Do less than pro rata - Pass
  28. 28. In the good old days, supportive investors would always do their pro rata
  29. 29. Supportive investors still tend to do their pro rata in the Series B
  30. 30. Funds can establish norms and stick to them
  31. 31. Does GRP have a follow-on policy?
  32. 32. Do early stage funds do selective follow-on rounds?
  33. 33. There's a difference between focused seed stage investing by VCs and shotgun seed investing by VCs
  34. 34. Don't give VCs contractual options on your next round
  35. 35. Taking office space can also be a signal
  36. 36. If my existing investors don't want to invest, how do I talk my way out of it?
  37. 37. Does a VC work against you in the Series A if they don't buy enough of the company in the seed round?
  38. 38. What are the pros of taking seed money from a VC?
  39. 39. Anything I missed that I should have brought up?
  40. 40. How to take an option-style investment from a VC
  41. 41. What's your favorite blog these days?
  42. 42. What's your favorite life hack these days?
  43. 43. Get intros to seed investors with: AngelList venturehacks.com/angellist
  44. 44. ✌ Get more startup advice Venture Hacks venturehacks.com @venturehacks

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