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Two articles worth your time (Oversubscribed Weekly #23)

May 9, 2019 by

Max here. We’ve got a couple quick links for y’all today.

First up is this list of 11 angel investing lessons from AngelList cofounder Babak Nivi. We normally focus on advice for founders, and don’t usually link to advice that’s geared towards other investors. But Nivi’s lessons are helpful for understanding the angel investor’s perspective.

I especially appreciated #9, which I’ll quote in full:

9. Incentives make for bad investing advice

Incentives influence the advice you get from VCs, lawyers, incubators, and everybody else. Everyone serves their own interests first. The best source for angel investing advice is other angels and founders.

People are generally well-meaning but, in the words of Upton Sinclair, “It is difficult to get a man to understand something, when his salary depends upon his not understanding it!”

A near-identical paragraph could be written for founders. The best source for fundraising advice is other founders!

Next up is YC cofounder Jessica Livington’s keynote from the third annual Female Founders’ Conference, “A Pretty Complete List on How Not to Fail.”

YC has a bunch of different advice on how not to fail, and it all makes not failing seem so easy. I remember reading Paul Graham’s essay “How Not to Die” and thinking that not dying was going to be so straightforward—we just had to do a couple simple things!

Of course, it’s not that simple. Or perhaps a better way to phrase that is that staying alive is simple, but not easy. I recommend reading the whole piece, but one section that especially stands out is this advice about fundraising:

We often get emails from startups saying “we’re running out of money, so we’re going to raise a series A now.” As if it were like making a second trip to the ATM. And when we ask how they’re doing, the answer is usually a combination of slow growth and high expenses. We have to tell them they have no hope of raising a series A and that they’ll have to make drastic changes even to survive.

That paragraph is focused on raising a Series A, but similar advice could apply to raising at earlier stages. We often hear founders talk about their fundraise with phrases like “this will give us 18 months of runway.” But a fundraising round isn’t about keeping you alive for a set period of time—it’s about proving out the milestones needed to get you to the next phase of your company. You need to show investors where you’ll go with their money, not just how long it will take you to get there.