May 13, 2024 · 1h 10m · news
Tom Blomfield: Do the Best All Raise Pre-Demo Day & YC's Fundraising Advice to Startups | E 1152 · 20VC with Harry Stebbings
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In this candid interview on "20VC," Monzo co-founder and Y Combinator Partner Tom Blomfield discusses the psychological toll of entrepreneurship, the mechanics of fundraising, and the inner workings of YC, while reflecting deeply on his personal transition from a burnt-out operator to finding fulfillment outside of tech.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 21.3% of the talking time here. How this is scored →
Harry as informed peer 2.6 Guest teaching 3.3 Guest disagreement 1.4 Harry pushing back 1.7
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 50:23 Directly rejecting host's thesis on Microsoft distribution
Tom flatly disagrees with Harry's assertion that Microsoft Office will crush AI apps, arguing forcefully that general tools cannot replace specialized vertical domain software.
Hardest push from Harry ▶ 54:55 Harry challenging the startup work-life balance mythHarry refuses Tom's framing on balance, explicitly pushing back that Monzo and GoCardless succeeded precisely because Tom lacked balance and that exceptionalism requires total obsession.
Biggest teaching moment ▶ 35:47 Tom correcting host on YC's seed dilution policyWhen Harry prepares to lay into YC for forcing an unrealistic 10% dilution target on VCs, Tom explicitly corrects him, explaining that YC offers custom advice and accommodates top tier funds taking 15 to 20%.
Harry holds his own ▶ 39:30 Harry calling out small check angel entitlementHarry showcases sharp VC cap table expertise by calling out small 50k check angels who demand 10 diligence calls and 15 references, forcefully asserting they must know their place.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Podcast Title Sequence and Guest Highlights | 2 | 2 | 1 | 1 | Harry asks about early childhood markers of exceptionalism, citing Cambridge and Bain as classic paths. Tom partially agrees but warns that being overly prescriptive risks missing great founders. | |
| The Brutal Experience of 96 Rejections | 1 | 2 | 0 | 0 | Tom recounts the painful experience of suffering 96 rejections for Monzo and having a pension fund pull out right as lockdown hit. Harry listens sympathetically and prompts the story. | |
| Investor Empathy and the Brutality of Fundraising | 3 | 3 | 1 | 1 | Harry asserts that young multi-stage VCs who haven't fundraised lack true empathy for founders, sharing a funny story about an LP. Tom agrees and details how Monzo disproved every VC objection along its path to a billion in revenue. | |
| Transitioning to Angel Investing and Joining YC | 3 | 3 | 1 | 2 | Harry asks sharp questions about Tom's aggressive angel investing spree of 76 checks in nine months. Tom explains his mistake of over-indexing on ideas rather than founder quality, which Harry reinforces. | |
| Analyzing the UK vs. US Tech Ecosystems | 2 | 5 | 3 | 2 | Harry brings up the common critique that European work ethic is lackluster compared to the US. Tom refutes the work ethic myth, educating Harry that the real gap lies in American optimism and career status norms. | |
| Monzo's US Expansion Challenges | 2 | 4 | 1 | 1 | Tom breaks down why Monzo's initial US expansion failed due to a cookie-cutter approach and explains the distinction between YC visiting partners and full partners. | |
| The Transition to Full Partner | 3 | 4 | 2 | 2 | Harry asks if investors must like founders to invest. Tom reframes the question, explaining why contrarian, slightly unlikable people often make the best founders. | |
| The YC Application and Drafting Process | 4 | 4 | 2 | 5 | Harry pushes back strongly against YC's 10-minute interview process, asking how they avoid missing brilliant but shy candidates. Tom defends the process by pointing to their comprehensive written applications. | |
| The Power of In-Person YC Batches | 1 | 2 | 0 | 0 | Tom explains why YC returned to mandatory in-person batches post-COVID, highlighting group office hours and cooking dinner for founders as key bonding rituals. | |
| The Structure of a YC Batch | 3 | 4 | 2 | 3 | Harry challenges the idea of launching early in a crowded consumer market where first impressions matter. Tom clarifies that founders must keep scope narrow while keeping the quality bar high. | |
| Pivots and the Hard Conviction of Founders | 3 | 3 | 1 | 1 | Tom explains YC's policy restricting fundraising until two weeks before demo day, warning how preemptive VC checks trap nervous founders into lower valuations. | |
| YC's Custom Fundraising Advice and Seed Round Dilution | 4 | 6 | 3 | 4 | Harry challenges YC's reported guidance pushing for only 10% seed dilution, arguing VCs cannot engage at 6%. Tom corrects Harry's assumption, explaining YC offers custom advice and allows flexibility for top partners. | |
| Pre-Product Market Fit Capital and Bad VC Behavior | 3 | 3 | 1 | 1 | Harry and Tom agree that excessive pre-PMF capital causes startups to lose urgency. Tom details YC's internal database of 10,000 investors used to filter out bad VC behavior. | |
| The Weight of a Check and Routing the Easiest Cash | 4 | 4 | 1 | 2 | Harry rails against small check angels who demand excessive diligence calls. Tom demonstrates YC's data-driven routing tool that calculates conversion probability and expected check value for top VC funds. | |
| Curation of Community and the AI Wave | 2 | 2 | 0 | 0 | Tom describes his experiment curating peer dinners for batch founders and draws parallels between the current AI platform shift and the 1995 internet and 2010 smartphone booms. | |
| Sustaining vs. Disruptive AI Innovations | 4 | 4 | 2 | 2 | Harry sets up the debate between sustaining vs disruptive AI models and foundation models vs application layers. Tom explains why foundational models will face commodity pricing similar to cloud infrastructure. | |
| The Power of Vertical AI Integration | 4 | 5 | 4 | 4 | Harry argues that incumbent distribution will crush AI app wrappers, citing Microsoft Office. Tom forcefully rejects Harry's thesis, explaining why specialized vertical tools deeply embedded in workflows will win. | |
| B2B SaaS Playbooks in an AI-Dominated Landscape | 2 | 3 | 1 | 1 | Tom advises B2B SaaS startups to target mid-market enterprise AI budgets and candidly questions whether he is temperamentally suited to be an investor rather than an operator. | |
| Startups on Hard Mode: The Toll of Monzo's Regulations | 4 | 4 | 3 | 5 | Harry directly challenges Tom's view on work-life balance, claiming nothing great is ever created with balance. Tom agrees for the early stages, but notes the burnout toll over a decade. | |
| Hating the Company: Handing Over the Monzo Reins | 2 | 2 | 0 | 1 | Tom reflects on hating Monzo by the end due to intense regulation and describes the humbling transition of moving to SF as a YC visiting partner where people ignored his opinions. | |
| Quick Fire: Paul Graham's Superpower of Optimism | 2 | 3 | 2 | 1 | In a quick-fire round, Tom praises Paul Graham's superpower of optimism and tells a story about a predatory VC who tried to squeeze Monzo's valuation days before signing. | |
| Quick Fire: Eileen Burbidge's Life-Saving Angel Support | 2 | 3 | 1 | 1 | Tom credits Eileen Burbidge as his most supportive investor for stepping in as interim CPO, and notes how Gary Tan brought focus back to YC's core batch compared to Sam Altman's era. | |
| Quick Fire: Complacency as the Threat to YC | 2 | 3 | 1 | 1 | Tom identifies complacency as the existential threat to YC, explaining how brand momentum could mask a decade of quality decay if partner hiring standards slip. | |
| Embracing Freedom and Hobbies Outside of Tech | 1 | 1 | 0 | 0 | Tom discusses finding joy in non-tech hobbies like pottery, sailing, and baking, concluding that building a family over the next decade matters more to him than founding another billion-dollar business. |
Statements from this episode (82)
Blomfield: Startup founders are not necessarily the most likable people
“I don't think founders are necessarily the most likable people, honestly.”
Stebbings: Exceptionalism shows early; nobody makes money first at Bain
“Because I always think that actually exceptionalism shows itself early in life like that. And no one comes out of Cambridge and just makes money at Bain for the first time.”
Blomfield: Rigid founder screening criteria cause investors to miss great founders
“In general, I do agree, but you know, there are, it takes many different types to start companies. I think to be so prescriptive is probably, you'll probably miss people, but.”
Blomfield: I wouldn't have started Monzo without Y Combinator
“I mean, I wouldn't have started Monzo without it, for sure”
Blomfield: GoCardless couldn't raise any investment in London in 2011
“We couldn't raise a single penny of investment in 2011.”
Blomfield: Monzo received 96 consecutive investor rejections for a 2020 flat round
“And I had 96 no's in a row for that fundraise to try and do a flat round.”
Blomfield: Monzo burned $100 million annually in early 2020
“We were burning a hundred million a year at the time.”
Blomfield: Monzo's revenue dropped 50% in one week during COVID lockdown
“Our revenue in the next week halved, went down by 50%.”
Blomfield: Monzo survived COVID by raising $100M in a 40% down round
“It was a sort of 40% down round. I think about 1.3 billion And we got a hundred million, and the company survived.”
Stebbings: Investors cannot truly empathize with founders without fundraising experience
“I don't think that you can actually ever really have empathy for a founder unless you've fundraised.”
Blomfield: Monzo acquired its first million customers with zero advertising spend
“But we got to a million customers with no advertising.”
Blomfield: Roughly 60% of Monzo customers deposit their salary into Monzo
“So then we spent the two years getting everyone to put their salary in, and now it's something like 60% of customers put their salary in.”
Blomfield: Monzo revenue grew nearly 10x from $100M at departure
“I left at a hundred million revenue or so, and it's now almost 10 X that.”
Tom Blomfield made 76 angel investments in nine months during 2021
“And then I started angel investing in 2021, and I managed to sell some shares in GoCard as my first company, and I put aside a pot of money that I wanted to put back into the tech ecosystem, specifically the UK tech ecosystem. So I made I was planning to inves…”
Blomfield: US-Europe startup gap is optimism and ambition, not work ethic
“I really don't think it's a work ethic question at all. I think there are other big differences. I think the big difference is one of, like, positivity, optimism, and ambition.”
Blomfield: Top UK CS students prefer finance and consulting over startups
“I've been talking to students for the last few days at our top universities, and the high status thing to do as a university CS undergrad is to go and work at Jane Street or Goldman Sachs or McKinsey.”
Blomfield: Monzo spent only 2% to 3% of its capital on US expansion
“We didn't, of all of the money Monzo has spent so far, probably only three, two or three percent of that was spent on the US, and it didn't get very much management attention.”
Blomfield: European neobanks N26, Revolut, and Monzo failed initial US expansion
“N-twenty-six has failed, Revolut's failed, Monzo's, the first go's failed”
Blomfield: Chase Sapphire and Amex prevent neobanks from winning affluent US consumers
“It's just not been a successful mainstream neobank in the U.S. Chime is good, but it's targeting kind of gig economy workers, and then for the more affluent customers, Chase Sapphire and American Express just have the market sewn up.”
Blomfield: YC requires 18-month visiting partner role before full partnership
“YC has this interesting model where they make you do a, be a visiting partner for 18 months, which is The, like, the most brutal job interview I've ever done.”
Blomfield: YC visiting partners act as teaching assistants to professors
“Being a visiting partner is a great apprenticeship, but it feels like, a little bit like being a teaching assistant at a university versus being a professor at a university. You know, the professor sets the syllabus and the exam questions and admits the studen…”
Blomfield: Dalton Caldwell excels at extracting great startup ideas from founders
“My first batch was with Dalton, and the way he can help young founders find new ideas, really deeply technical young founders without a clue what they want to work on, Dalton can come in and sort of Unpick their background and history and find some thread to p…”
Blomfield: Michael Seibel balances brutally hard feedback with genuine warmth
“Michael Seibel I did a batch with just before I got partnership, and he has this incredible way of giving the most brutally hard feedback you can imagine. The founder absolutely needs to hear, and then finishing off with his This, like, heartwarming chortle, t…”
Blomfield: VCs should back arrogant, obnoxious founders if they build massive businesses
“I don't think so. I mean, it helps, it makes your life more fun, but there are people who are just like a little bit scary, you know, it's like they're a little bit arrogant, perhaps a little bit obnoxious, a little bit too sure of themselves, and I wouldn't w…”
Blomfield: People who constantly call out broken systems make great startup founders
“I think it makes great founders, where they're like, just so annoyed if something's broken, they have to fix it, and they have to tell people something's wrong, and it's a, you can make a shitty employee, but a really good founder.”
Blomfield: A single YC partner can unilaterally decide to fund a startup
“Each of the partners has access to the entire application pool, but if I read an application and I, I'm the first one to say, yes, that's mine, then I get to interview it. And if I interview it, and I'm the sole person who says, yes, we will invest, then it ge…”
Blomfield: Reads thousands of YC applications per batch to fund 25 startups
“I'll read several thousand, pick a hundred to interview, fund 25.”
Blomfield: YC partners gather enough evaluation data in 3 to 4 minutes
“Get enough in three or four minutes, but it seems rude to finish the interview so quickly.”
Blomfield: YC interviews count for only 10% to 20% of admissions decisions
“I'd say the interview is like 10 or 20% of the entire process.”
Blomfield: Standard Oxford-to-McKinsey career paths are 'boring' for YC candidates
“That's the kind of exceptionalism that we're looking for in some area of their life. And it might come out through the application, it might be the interview video, or the interview itself, but we're looking for that spark that they are not average, like they'…”
Blomfield: YC requires founders to relocate to San Francisco for batches
“Yes, they, we more or less require everyone to relocate now to San Francisco in the dog patch where we have our office, and spend three to four months there.”
Blomfield: Weekly Zoom calls with founders feel transactional and empty
“But overall, the in-person experience is dramatically better. Having in-person office hours, group office hours, even cooking for people, like the act of cooking dinner for a group of people you've invested in, and then serving them with your own hands. It's j…”
Tom Blomfield: Y Combinator batches are sharded into four mini-groups
“YC spit into four groups, so it's not a whole YC, it's four separate mini YCs, it's sharded, and you'll get a very different experience in each one of them.”
Tom Blomfield: Peer group public pressure drives founders to work harder
“And like the public pressure, even though it's only 20 people in a room, pushes people to work harder than they ever believed was possible.”
Blomfield: Startups should launch with tiny, highly polished feature sets
“I would always encourage founders to go for a very, very, very narrow feature set, like, even narrower than they possibly could imagine, and polish it to a very, very high level of quality and get people, only a few people, a few hundred people, really excitin…”
Blomfield: Great founders simultaneously hold 10-year vision and daily execution
“This is a key skill of a founder, which is holding these two realities in your head simultaneously without the cognitive dissonance or driving yourself crazy. One is the big vision of 10 years. Say the one percent best outcome, if this really, really works, wh…”
Blomfield: Repeatedly pivoting a startup indicates the founder is the problem
“Pivoting is like divorces. Like maybe one or two is reasonable, but if you're doing it multiple times in a row, maybe the problem is you.”
Blomfield: Shutting down Continuity improved YC's relationships with multi-stage VCs
“Shutting down continuity, our growth fund, has enabled to have a, enabled WIC to have a much more collaborative relationship with multi-stage VCs.”
Blomfield: Top YC startups always raise pre-Demo Day, prompting new deadline rules
“The trope was always, oh, everyone raises before demo day, which is true, like the best companies absolutely always raise before demo day, and so now we've just set a deadline, like two weeks before demo day, and said, you may start fundraising on that day, tw…”
Blomfield: Preemptive VC offers yield lower valuations than Demo Day auctions
“They give you a preemptive offer. But the valuation is not as good as you would get by demo day, because that's why they're doing this, right?”
Blomfield: Profitable $1M ARR YC startup accepted lower valuation due to fundraising anxiety
“And this happened to a couple of my companies, this batch, where a phenomenal, like, crazy all-star team, like, ridiculous, like, every sort of pedigree you'd want amazing product, profitable, like, more than a million in revenue, and that just, the founder wa…”
Blomfield: Founders Were Selling 25% to 30% at Seed Stage
“The advice we've seen, or the trends we've seen over the last few years is that founders were getting way over diluted in their seed round. They're giving away 25 or 30% of their company at seed.”
Tom Blomfield: Most YC startups are pre-product-market fit at Demo Day
“Because most of our companies at Demo Day are pre-product market fit.”
Tom Blomfield: Excess capital pre-product-market fit slows down startups
“More capital pre-product market fit does not help. People just end up hiring tons of people which slows everything down and stops them being so nimble.”
Blomfield: YC maintains an internal database rating 10,000 venture investors
“So YC has an investor database, which has 10,000 people in. I'm sure you're in there. We can perhaps look it up. And it has reviews from all of the YC founders that have taken investment from them, both on their process and what they would like to work with af…”
Tom Blomfield: YC founders deny meetings to poorly rated investors
“And all YC companies have a huge amount of inbound investor interest, and before they book meetings, they will look each investor up in the database and see, I, have you treated found as well or have you not? And if you've not treated found as well, you're not…”
Stebbings: Small angel checks shouldn't demand heavy diligence and references
“The biggest annoyance for me is actually when people don't understand the weight of their check, and what I mean by that is like when a small 50 or a hundred k check wants 10 diligence meetings, and then wants 15 references, and you're like, dude, you're a fuc…”
Blomfield: YC tracks VC meeting conversion rates and expected meeting value
“This is what I'm doing right now with another of our partners, Brad, We have data on how many meetings each VC takes, how many investments they actually make, and what the checker size is, and so we can tell our founders what is the percentage chance of conver…”
Blomfield: 80% to 85% of YC startups successfully raise their target funding
“The vast, vast majority of YC companies end up raising their target anyway. Some might take a little longer than you expected, and some might go very fast. But something like 80 or 85% will raise their full, sort of, target amount, which might be two or three …”
Blomfield: YC tracks partner fundraising data but deliberately ignores it
“Yeah, I, we have that data and we ignore it because it's just so easy to, like, it's not easy to gamify for sure. Yeah, who cares that you raise ten million from XYZ investor. It just, We don't want to incentivize people to raise, raising that.”
Tom Blomfield: AI innovations will be replicated across competitors within months
“The US has made like non-competes even less enforceable now. People, talent is going to jump between these places so quickly. So you discover an innovation at one place, and if weeks or months later, it's replicated everywhere else, I think.”
Blomfield: OpenAI will not displace specialized vertical AI startups
“And like, I don't think OpenAI is going to come and steamroll, like, the construction company, AI companies, because they're not going to deeply integrate into the processes and software that exists in each of those industries.”
Blomfield: Every computer worker will have an AI assistant by 2027
“So I really believe everyone who works with a computer will have an AI co-pilot assistant thing in the next two or three years, whether you're like an oncologist or a law professor.”
Blomfield: Microsoft Office will not displace specialized vertical AI software
“I do, but I don't agree because I think Microsoft Office, like, by definition has to be a general product. It will be the best word processor for sure, but it's not going to be the tool that the dentist is actually using to write their clinical notes after a m…”
Blomfield: AI B2B SaaS startups should target mid-market, not other startups
“Big companies are now more willing to spend money on this stuff than they ever were. So the previous advice of, like, go and sell to other startups, I think is actually not good for very, and maybe a dev tool startup, go and sell to other startups, but in gene…”
Blomfield: AI startups hit $1M revenue from Fortune 500s within YC batch
“I've seen companies go from zero to like half a million or a million of revenue within the YC batch. With really, really big companies, like Fortune, 500 companies, and turn them into recurring contracts.”
Tom Blomfield: I will absolutely never found another company
“Absolutely not. I love it, but it ruined... It ruined my life in a way.”
Tom Blomfield: Running a large company really sucks
“The problem is, when you're good at that stuff, it turns into a big company. And then you have to run a fucking big company, which sucks. It really, really sucks.”
Blomfield: Revolut's long-held culture makes changing regulatory course difficult
“I think Revolut have acted in a certain way for so long that it is hard for them to change course, really honestly.”
Blomfield: Monzo's early push for bank regulation paid off long-term
“So, we intended to be a regulated bank in the very, very start. We acted like that, and it now, 10 years on, we are reaping the rewards of that.”
Blomfield: Extreme work intensity works short-term but is unsustainable long-term
“I agree over a short to medium time period. I think, I don't know how founders do it over a 10 or 20 year time period, because I cannot work for that intensity for that long.”
Blomfield: Monzo scaling to 1,000 employees created culture clash over work-life balance
“The first, absolutely first two, three years at Monzo, we were working like crazy people. I mean, the first 50 people at Monzo were so spectacularly talented, and gave, like, I'm friends with so many of them now still, and they're like, they Bear the scars of …”
Blomfield: I ended up hating Monzo because it became bloated and over-regulated
“I loved the product all the way through, but by the end I hated the company because it got so big and so over-regulated in my opinion,”
Blomfield: Monzo's CEO and COO navigated regulation better than I ever could
“And I think TS, the new CEO, and Sajata, the COO, are spectacularly good at that, as well as maintaining the culture and the products. And they've just done such a good job taking it over the, you know, when I left it over the next four years that I couldn't h…”
Blomfield: Offhand Founder Remarks at Monzo Sent 30-Person Teams Off Course
“At Monzo, anytime I said anything, A whole team would, like, spring into action, and even if I didn't intend them to do it, I'd be very careful what I said, because literally I'd come back two weeks later and find 30 people had gone off in crazy tangent.”
Blomfield: Sarcastic British culture makes for terrible startups
“And it's the British culture, you know, it's so easy to trash an idea and be kind of sarcastic, and it's great, makes for great comedy, makes for terrible startups. You need that, like, boundless energy and optimism, and it's not a natural British state, but i…”
Blomfield: Mickey Malka is the ultimate board choice for fintech
“If I was doing fintech, I would choose Mickey Malka from Ribbit.”
Blomfield: SoftBank's London team is arrogant and unwelcome on cap tables
“Probably SoftBank. I had a very unpleasant experience with the SoftBank London team. Just a bunch of pretty arrogant, like, Deutsche Bank traders turned venture capital investors. They were not fun at all.”
Monzo board blacklisted predatory investor who attempted last-minute valuation cut
“He has been blacklisted from, he's tried to invest even after I left. And to their credit, the Monzo board have said, we're not working with you.”
Eileen Burbidge Worked as Monzo's Interim CPO for Six Months
“When we lost a chief product officer, sorry, chief people officer, she came and did an exec job at Monzo effectively for like four days a week for six months.”
Blomfield: Y Combinator Improved Significantly Under Garry Tan
“I think YC has changed a lot in the last two years for the better, and I put it, a lot of it down to Gary.”
Blomfield: Sam Altman was distracted at YC by OpenAI from early on
“And then really, honestly, under Sam Altman, I think it expanded in a bunch of different weird areas, and it just lacked strong, and Sam was distracted. He was doing OpenAI from very, very early on.”
Blomfield: Complacency is the single biggest threat to Y Combinator
“Complacency, I think. We could coast on our laurel, rest on our laurels, I guess, not to mix metaphors, for quite a long time without realizing it. Yeah, and then we just recruit bad partners who give bad advice, but continue to recruit reasonable companies, a…”
Blomfield: Stripe's Collison brothers would be incredible YC partners
“I mean, I think either of the Collisons would be incredible.”
Blomfield: Brian Chesky gives phenomenal advice at Y Combinator events
“I mean, Brian Chesky, maybe as a second actor, he could come to YC. He speaks at every Bachelor event, and his advice is just phenomenal.”
Blomfield stayed at Monzo long after he stopped being happy
“It drove me to do Monzo, and drove me to stay at Monzo for a long time after I was happy, and in the years since, it's kind of gone away.”