What-if
Ralston: Y Combinator would not have funded a young Steve Jobs
“I don't think we'd fund a Steve Jobs at YC. Well, that's not good. Yeah. And the reason is, especially when Steve Jobs was starting off, he was an asshole.”
Opinion
Ralston: Magic Leap raised $2.3B but seems to have almost nothing
“Magic Leap raised 2.3 billion dollars, and they seem to have almost nothing.”
Insight
Ralston: Seed investors demanding five-year financial projections are inexperienced
“If you run into an investor who is asking for five-year projections at seed, you've run into what we colloquially call a noob. They don't know what they're doing. Who has five year predictions at this point?”
Opinion
Ralston: Pitch decks are largely useless for raising seed funding
“For raising seed, I think decks are not that useful. As an angel investor myself, I almost never even look at the deck. I just want to look at the founder and hear their story and see how they tell it.”
Opinion
Ralston: VCs are not all brilliant, but they easily detect founder dishonesty
“If there's one thing, VCs aren't all brilliant, they're not actually all that good at being a VC, but what they are good at is sniffing this stuff out.”
Insight
Ralston: Unequal equity splits like 51/49 are better to maintain control
“It's usually better to have somewhat equal shares, not, not, but not completely equal, and if one person has 51% and the other person has 49%, then they can control.”
Insight
Ralston: The best startup founders are often unemployable
“One thing to remember and keep in mind is that often startup founders are unemployable. Not always, but often. The best ones.”
Insight
Ralston: SAFEs beat debt because debt allows investors to kill viable startups
“About lifestyle companies and why I think the safe is preferred in general to debt is because we've seen too many times where the fact that there's debt there is used to kill a company that didn't have to die. And it's too easy for investors to call that debt …”
Insight
Ralston: Angel investors mostly have marginal or minimal impact on startups
“Angel investors can, in limited cases, have substantive impact on the companies in which they invest. Mostly their impact is marginal, minimum.”
Opinion
Ralston: Combining Early Stage and Growth Investing in One Fund Is a Bad Idea
“VC started doing both early stage and growth, sometimes in the same fund, strangely, which I don't necessarily think is a great idea.”
Assertion Partly supported
Ralston: Startups Are Raising as Much Money in ICOs as Traditional VC
“Radical in that, like so early, there's an equal amount of money in ICOs being raised by startups as venture money.”
Prediction Not checkable as stated
Ralston: The Startup ICO Fundraising Boom Is Not Sustainable
“Don't really believe it's sustainable.”
Insight
Ralston: Conditioning angel checks on round completion makes investors useless
“Don't try to be the last money in because you don't have any confidence in yourself. So some of the worst investor behavior is to say, Craig, I like you. I like your company. You're raising a million dollars. I'll put a 100,000 dollars in as soon as you raise …”
Insight
Ralston: The venture capital fundraising market is neither rational nor fair
“It seems like kind of an open market, but it's not rational. It's seldom fair.”
Insight
Ralston: The right investor is often whoever writes a check first
“Sometimes the right investors will be the investor With whom you resonate the best and who you think is going to be the best added value. Sometimes the right investor be the person who is willing to write you a check first.”
Insight
Ralston: Startups should ideally raise capital when they don't need it
“The best time to raise money is when you don't need it. This isn't always possible. But when you don't need money, investors see the biggest opportunity.”
Insight
Ralston: Founders should raise enough capital to reach profitability
“One thought process to go through is assume when you raise money that this is the last time you'll ever be able to raise. So raise enough so you won't need more, so you can get to profitability.”
Assertion Supported
Ralston: Magic Leap raised billions of dollars purely on a story
“Look at Magic Leap. If you've heard of Magic Leap, they raised billions on just a story.”
Insight
Ralston: Top investors prefer backing startups before they gain expensive traction
“Interestingly, the very best investors want to get you before you have all that stuff, because you're expensive by then. The greatest, best investors are Airbnb before they're Airbnb, before they have traction.”
Insight
Ralston: Setting too high a valuation cap can kill a fundraising round
“It is really dangerous to choose too high a valuation. And in fact, it can kill your fundraising, because it's quite difficult to go to, ah, an investor who might kind of be interested, and you say, I'm gonna raise at a twelve million dollar cap. On my safe. A…”
Disclosure
Ralston: Y Combinator no longer recommends startups use convertible notes
“And a convertible note is a kind of debt as well, although we don't recommend you use convertible notes anymore.”
Disclosure
Ralston: YC advises founders against priced equity in seed rounds
“We don't recommend you do equity in a seed round. Usually it'll be on some sort of convertible.”
Insight
Ralston: Investor meetings go well when investors talk more than founders
“Also, a good sign that an investor meeting is going well is when they talk at least as much or more than you do.”
Insight
Ralston: A founder's primary leverage against experienced VCs is delaying
“They're almost certainly better at you in negotiation. So if you do get into a negotiation, a deep negotiation, the one thing you have on your side is you can delay.”
Geoff Ralston