Someone asked this in the Top Builder chat so I thought I'd share my answer more widely:
  • I knew this going in but I see a lot of founders make this mistake: don't be full of shit. If you don't know something, say so. The biggest red flag to an investor is an investment being untrustworthy. This includes lying but also being afraid of reality/delusional.
  • if you're raising on SAFEs watch this video:
  • know what you're worth (I've attached median valuations from Q3 of last year), and I don't mean you're worth more than you think. It can go either way - you might be worth way less than you think. The median is made up of many companies with varying levels of potential.
  • until they sign, investors haven't invested so continue to treat them as a counterparty and assume they won't invest until they do sign
  • investors are a counterparty. bitcoin investors LOVE to say bitcoin companies have lower valuations than the general tech industry does. It does historically, but that's largely irrelevant. It's akin to them saying "I'm used to getting sweet deals. You owe me one too." So again, know what you're worth. Investors will complain about company valuations like we all do our grocery bill. It doesn't change the price of milk.
  • few investors will tell you an outright no. The game theory has them maximizing optionality. If it's not a yes, it's a no. Don't waste your time on investors that will only tease you.
  • a lot of bitcoin venture investors haven't been investing very long. This is good and bad, but if they haven't been investing very long, don't grant them authority about things only a veteran would know. And again, even if they are a veteran, they are a counterparty.
  • at an early stage, all things being equal, favor investors that can provide you more than money and try to put investors that were founders on your cap table (this game is a mess and it'll help to have people who have been in your shoes)
  • don't give up. sometimes you can't raise because you suck, you suck at communicating, or your product sucks, but sometimes you can't raise because you only talked to investors that suck

There's a lot in here that might make you suspicious of investors generally. Don't be! I genuinely like all of my investors and are friends with most of them. It's just that all apple orchards have bad apples and when you're farming apples you have to know a lot about apples.
Great thoughts here! You will spend an unholy amount on lawyers which is very hard to budget for. The more you want to do cool special Bitcoin things with your company setup, the more you will pay your lawyers. Keep it simple, standard, and lean with custom things wrt legal.
For pitches, practice a ton with acquaintances that have heard VC pitches before. Then, pitch to less likely VCs that aren't your favorites first and learn from their questions. Then, you'll sound awesome for your favorite VCs.
Know the lingo of burn rate, runway, TAM, SOM, KPIs, and be a business numbers wonk. If you don't have numbers yet, know what you're going to track and optimize for.
Use for pitch decks to make it look really good.
Have projections that paint the picture of "hockey stick" growth and have a thesis that supports it.
Be a nice person. You will pitch to these people again. Bitcoin VC is a small space and they talk. Even so, don't make the VCs sign NDAs.
ALSO Don't do a post money SAFE like Y combinator recommends! It will dilute you like crazy if you do a subsequent SAFE aka "stacking SAFEs"
109 sats \ 1 reply \ @k00b OP 9 Feb
Can you elaborate on this? Someone told me about this once but it seemed like a minuscule difference in dilution.
Let's say I raised two rounds on post-money SAFEs, selling 10% of the company each round for 20% total.
What the dilution difference when selling the same amount of equity on stacked pre-money SAFEs?
100 sats \ 0 replies \ @k00b OP 9 Feb
Found the old thread I was sent for all the sports fans out there. The nut of it all:
Afaict you get exactly the dilution you thought you would ... past rounds just aren't diluted as you stack SAFEs. I guess those darn early investors shouldn't get what they are sold and hope their founder doesn't continue to raise on pre-money SAFEs?
979 sats \ 0 replies \ @aljaz 8 Feb
plan for much longer runway than you think, raising on top of the bull market and then trying to do another round in the depths of the bear market is painful
startups dont go bankrupt - founders do
its easier to divorce a wife than a cofounder, pick wisely
every bitcoin bull run funds solutions for the problems of the previous one
investors are as cyclical as the markets
if your idea will take 3years to build then raise 3y worth of runway, don't plan to figure it out as you go
small team of talented individuals that work great together can outperform large institutions
bitcoiners are one of the toughest ppl to sell things to
freedom tech is rarely profitable, plan accordingly
most companies are not venture scale companies, small bootstrap businesses producing cashflow are severely underrated
the fact that you raised money doesn't mean your idea is good
everything will take MUCH longer than you think
142 sats \ 4 replies \ @ek 8 Feb
I don't have much to offer regarding this topic but I really liked this quote:
investors don't invest in ideas, they invest in the person behind the ideas
Not sure where I picked this up, maybe some interview with Sam Altman.
I think this quote is related to this:
I knew this going in but I see a lot of founders make this mistake: don't be full of shit. If you don't know something, say so. The biggest red flag to an investor is an investment being untrustworthy. This includes lying but also being afraid of reality/delusional.
1563 sats \ 0 replies \ @davidw 8 Feb
I know Buffet gets a lot of fair criticism, but one of the things he often said was he liked businesses that would work regardless of whether the person at the helm was great or not. He would pick great businesses over great founders. Bonus if you can tick both boxes.
Probably doesn’t work so well as a principle in startup world, but it is a useful counterbalance for the above mentality of favouring people… if putting too much weight on someone being charismatic & energetic.
In comparison to a project with already significant traction and already on a growth trajectory.
The influence of the founder is far less of importance in the success of the startup, when it’s solving customers problems efficiently.
Yes...the person behind is like "the business card of the idea".
In Hungarian language it exist a proverb, which say "don't listen to what he says, but who says it". I think your quote is the "business synonyme" of this proverb
737 sats \ 1 reply \ @k00b OP 8 Feb
investors don't invest in ideas, they invest in the person behind the ideas
It's the true true. Your product/idea is an expression of you too though, so this doesn't mean the product/idea is irrelevant.
69 sats \ 0 replies \ @ek 8 Feb
Yeah, agree. Was wondering how I can make this statement sound less absolute but still cool but then I just left it as an exercise to the reader.