Summaries Startup Funding and Investing Investor Insights from Fred Wilson at Startup School NY 2014

This is a summary of a YouTube video "Fred Wilson Interview at Startup School NY 2014" by Y Combinator!

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Investors value conviction and clear communication from founders, prioritize team evaluation, and location can impact start-up success.

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  00:00

  Investors need conviction and opinions, not hedging and following the hot thing, and it's better to have an investor who challenges your pitch than one who says nothing.
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  02:39

  Investors prefer founders who can communicate their ideas crisply and simply, even if they have preconceived notions of what they're looking for.
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  06:23

  PG considered "Airbnb for tutors" idea, but invested in the founding team and the company's potential.
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  08:03

  USV is better at evaluating teams after they create a product, while seed investors recognize potential.
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  12:56

  An investor bet on a team he knew well and a hot property, overlooking some analysis due to his respect for the people involved.
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  16:50

  Entrepreneurs can raise a lot of capital in a seller's market, but having too little or too much money can hurt the success of a start-up.
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  20:16

  Seed investments may be priced correctly now due to higher success rates of start-ups and Y seed, but there is still no price parity between different locations.
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  23:31

  Start your start-up where there's enough start-up and investor density to recruit high-quality talent, such as Israel or New York.

Detailed summary

• 💰
  00:00

  Investors need conviction and opinions, not hedging and following the hot thing, and it's better to have an investor who challenges your pitch than one who says nothing.

  • Fred Wilson, a well-known investor in technology, was introduced by Aaron Harris and has founded two separate VC firms, Flat Iron Partners and Union Square Ventures.
  • Investors need conviction and opinions, not hedging and following the hot thing.
  • Investors and entrepreneurs may not always agree, but it's better to have an investor who challenges your pitch than one who says nothing, and ultimately, investors look for something that they believe in.
• 💰
  02:39

  Investors prefer founders who can communicate their ideas crisply and simply, even if they have preconceived notions of what they're looking for.

  • Investors come into meetings with preconceived notions of what they're looking for, and sometimes specific ideas like the creation of a Google for jobs can lead to successful investments.
  • Entrepreneurs generally come up with half-baked ideas that investors have a thematic understanding of, but they become obsessed with their company and understand the opportunity better than investors, and investors prefer founders who can communicate their ideas crisply and simply.
  • Some people are born with the gift of simplifying things, while others can develop it, and the speaker has worked on it over the years and has gotten better at positioning opportunities quickly and attractively for portfolio companies.
• 👀
  06:23

  PG considered "Airbnb for tutors" idea, but invested in the founding team and the company's potential.

  • Communicating crisply and clearly without buzzwords or "this for that" comparisons is an important skill.
  • PG was interested in the idea of being the "Airbnb for tutors" but ultimately saw the potential of the founding team and the company's future.
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  08:03

  USV is better at evaluating teams after they create a product, while seed investors recognize potential.

  • Seed investors are good at recognizing the potential of a team and their big idea, but USV is better at evaluating a team once they have created a product.
  • Teaching coding in-browser was a unique and inviting approach that helped Codecademy take off.
  • Investment decisions are based on the market, product, and expected numbers, but there is no formula or algorithm, and it's more of an art than science.
  • The company had a churn problem due to passive music listening habits, which was not initially visible due to high acquisition, leading to difficulty in overcoming the churn.
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  12:56

  An investor bet on a team he knew well and a hot property, overlooking some analysis due to his respect for the people involved.

  • Investor made a bet on a team he knew well and a hot property, and was willing to overlook some analysis due to his respect for the people involved.
  • Build the product, get market product fit, raise series A to build a 10-14 person team, raise series B to scale the team and take the market, raise series C to get profitability, and then take the company public or sell it.
  • Starting a startup may be easier than ever with reduced costs, but seed rounds are getting larger and larger, indicating a lack of commitment to the necessary grind.
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  16:50

  Entrepreneurs can raise a lot of capital in a seller's market, but having too little or too much money can hurt the success of a start-up.

  • Entrepreneurs are in a seller's market where they can raise a lot of capital, but having too little or too much money can be detrimental to the success of a start-up.
  • Investors may be concerned about the increasing prices of seed and series rounds, but the low interest rate environment suggests that this trend may continue for some time.
  • Investors are becoming more willing to invest in places outside of Silicon Valley and New York due to the supply-demand equation not being in favor of entrepreneurs in those areas.
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  20:16

  Seed investments may be priced correctly now due to higher success rates of start-ups and Y seed, but there is still no price parity between different locations.

  • Seed investments may be finally priced correctly due to the increasing success rates of start-ups and the use of Y seed, which increases the probability of success.
  • Investors are finding deals all over the world due to the internet, but there is not yet price parity between different locations.
  • Entrepreneurs in regions with high startup density and access to capital, such as Silicon Valley and New York, have an advantage over those in areas with less capital.
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  23:31

  Start your start-up where there's enough start-up and investor density to recruit high-quality talent, such as Israel or New York.

  • No interview needed, YC thinks it's worked out well.
  • Start your start-up wherever is best for your business, but pick a place with enough start-up and investor density to recruit high-quality talent.
  • Israel has a vibrant start-up scene with a lot of repeat entrepreneurs and knowledge about how to do start-ups.
  • New York's start-up environment has shifted towards enterprise, sass-type business models, with a balance of consumer start-ups, and an increase in capital.