Last month, during the virtual Disrupt SF, Sequoia conducted a special, sponsored AMA for founders in Startup Battlefield and Startup Alley. Stephanie Zhan, Konstantine Buhler, George Robson, and Josephine Chen offered some critical takeaways and recommendations. We wanted to share it since it was wonderful. We took some of the session’s highlights and spoke with a few additional partners to learn more about what founders need to know, such as how to ask for help, fundraising concepts, and how to develop a corporate culture, among other things. What is one thing you wish you could tell your founding self now that you have sat on both sides of the table as a founder and an investor?
Shaun Maguire: I believe most founders are unaware of how unpredictable fundraising may be. Having sat in the room for five years, I have learned that investment requires the stars to align. It necessitates the discovery of a champion, who must discover at the appropriate moment. Perhaps they have made two more investments this year. They appear to be overworked. When you meet with them, they take board seats and do not have enough bandwidth. On the other hand, you have caught them off guard. Alternatively, it is an industry in which they previously invested with a firm that failed. There is a lot of unpredictability.
Because they invested in three firms the week before, the firm may feel like its investment pace is too fast. Thus, now when you are pitching them, they think the speed is too fast, so the bar has risen from a week before. It is ninety percent of the time chance, not you. What can a business owner do to get ready for when the stars align?
Maguire, Shaun: It is a long-term commitment when someone joins your company’s board of directors. It is a long-term commitment of at least ten years. Many entrepreneurs believe that they should only meet with VCs during the financing process. They want to have the meetings when they have finished preparing the deck. I have only invested in one founder out of the 15 boards I have been on, and I met them within a month of the investment process. I met the others three months before they arrived to raise them. If I am going to be in a long-term relationship with someone, I want to get to know them as a person and collect longitudinal data. I am curious to see how they have fared over time.
What advice would you provide to non-traditional founders? How can you get past the pattern-matching framework that certain venture capitalists have in their heads?
Maguire, Shaun: Determine your high-level aim to start a business and move backwards from there. What are the stepping-stones I will need to get there if that is my goal? In high school, I had a 1.0 GPA and had to work hard to recover. I spent a lot of time thinking about stepping stone routes. I wanted to attend a good institution, so I started at a community college. I pondered, “How am I going to stand out?” I need to do something outrageous to make a statement. Something new is required of me.
Reverse engineer the process. Is there anything I can accomplish right now as a founder that will serve as a stepping-stone to the broader goals? Second, persistent. It is also not, what the public wants to hear. We had to approach 100 investors with Escape Dynamics [Shaun Maguire’s first startup] before finding one who would collaborate with us.