Before You Start Fundraising, You Need to Get Acclimated
Last week, I met with 4 different startups based outside of California: one from New York, another in London, a third in Vancouver and the fourth from Toronto. All of these startups are preparing to fundraise in the fall (either for their Seed or Series A round). At some point in each of those conversations, I found myself giving the founders a piece of advice that I hadn’t previously offered with any regularity:
“You should go to San Francisco a few weeks before you start to fundraise. You need to get acclimated.”
It wasn’t all that long ago that the majority of fundraising — even at later stages — was being done mostly online. For founders based outside of the U.S., raising from Silicon Valley VCs took a bit of extra prep work, but for the most part it didn’t matter if you were based in Brisbane, California or Brisbane, Australia. As recently as Q1, most Seed and Series A fundraising processes still began with virtual intro calls.
But over the past few quarters, things have shifted dramatically. Silicon Valley has been speeding up. A lot.
The first half of the year saw valuations for the top 5% of Seed rounds hit unprecedented highs, driven primarily by a surge in preemptive fundraising rounds. At the same time, the culture in Silicon Valley has been evolving to reflect its shift in velocity and intensity, manifesting in ways both big and small.
I hadn’t internalized just how prevalent these changes have been until I was on those calls last week. As I spoke with each of the founders, I found myself subconsciously (and not-so-subconsciously) noticing a variety of tells that made clear that they were not based in the Bay Area. An observation that my mind immediately translated to, “they’re not going fast enough.”
Considering that 2 of the 4 founding teams had previously spent considerable time in Silicon Valley, I was shocked at just how apparent it was to me that they were no longer locals. Some of it was language — there are a lot of new phrases that have entered the San Francisco lexicon as of late (the tongue-in-cheek website SF-isms catalogues some of them). But mostly it was their sense of urgency.
Or lack thereof.
I want to be clear that I’m not suggesting that any of these four startups aren’t operating at a high velocity — they all are — but Silicon Valley founders have upped their intensity and velocity to such a degree that everyone else seems slow by comparison. And in fundraising, just as in life, perception is reality.
Velocity has always been the metric that matters most when it comes to early-stage startups. And in today’s AI-driven landscape, Silicon Valley VCs are paying more attention than ever to how fast startups are going. Fundraising calls are happening in hours instead of days. Meetings are scheduled over text messages instead of through Calendly links. Everything in the ecosystem is happening faster.
Which brings us back to my fundraising advice.
It used to be relatively easy to prepare out-of-town founders for Silicon Valley fundraising by pointing them to a few key phrases, a list of what was “hot or not” in San Francisco at the time and a rubric of what Bay Area VCs would focus on for their stage. But it’s not so simple anymore. Right now many Seed and Series A VCs are struggling to adapt to the changing landscape, so there is no single list of what these investors are looking for to point at. Moreover, Silicon Valley itself is still accelerating.
Which makes it challenging to enumerate exactly what out-of-town founders should do in order to best prepare to pitch Silicon Valley VCs at this particular moment in time.
So I will instead share the advice I gave to each of the four founders I spoke to last week:
As you prepare your pitch for Silicon Valley VCs, reduce your level of confidence in feedback from hometown founders and investors (unless they have spent considerable time in the Bay Area recently and/or successfully fundraised from Silicon Valley VCs this year). In all likelihood, their advice is outdated.
Counterbalance this by proactively seeking feedback from founders, investors and others with strong current ties to Silicon Valley.
If at all possible, spend 2 - 3 weeks in San Francisco immediately prior to kicking off your fundraise. Doing so will:
Give you enough time to adjust and acclimate to the “new” pace and culture of Silicon Valley
Allow you to tap into the serendipity of Silicon Valley by attending events and meeting other founders
Provide an opportunity for you to solicit feedback on your pitch and fundraising strategy from Silicon Valley-based founders and investors
Expect to do most of your fundraising in person this time around
For founders outside of California who are trying to raise a Seed or Series A round from Silicon Valley VCs this year, I think this is likely to be the best approach given (a) the currently evolving nature of Silicon Valley, and (b) the widening gap in velocity/intensity/urgency between Silicon Valley and the rest of the world.
Note: the above advice is specifically geared towards founders trying to raise Seed or Series A rounds from Silicon Valley VCs. While Pre-Seed founders can certainly benefit from spending time in Silicon Valley, the vast majority of Pre-Seed rounds globally continue to be raised from local investors, so it may not impact your success rate when it comes to fundraising.