It's worth noting that HireVue, the company used to process the applications, is not a First Round Capital-funded startup, which is unusual as VC-firms tend to favor their own startups for external affairs. (Hacker News, for example, has had interaction with YC companies Octopart, Algolia, and Firebase, possibly more.)
Semi-Curious about the "seed-stage" investments being 1-3m as that seems rather large even by post demo day YC standards. Unless the expectation is that there has been a friends/family/angel round prior to this with existing growth/traction from said investments? I think some additional clarification on what traction/stage First Round is looking for would save some time on their end and also for companies applying that might not fit into that mold not to waste their time.
YC has had the field to themselves for a decade because no other firm actually believes the best people are outside their personal networks.
Other VCs want to believe in "proprietary deal flow" and their own ability to worm into hot companies. Probably because it seems more a sure thing than, gasp, actually judging startups on their merits, like YC at least tries to do.
The incumbents often see the future, but rarely update their fundamental viewpoint to match the new reality. It's the innovator's dilemma applied to VCs.
This is exactly the issue I find with a lot of venture capital firms. They're letting Ycombinator kill their deal flows because they're too stubborn to consider deals from outside their networks. It's a shame really. Some of these firms have the nerve to say Silicon Valley is merit based when they're simply just taking institutional capital and funding their rich boy network.
The most common way the best entrepreneurs find their way into their networks is by succeeding without their help. The old VC strategy of just waiting around to pick off the winners won't work so well these days.
The idea that the best entrepreneurs are good at things like personal networking, or ladder climbing, is clearly false.
One example: Elon Musk didn't have the "hustle" to talk to anyone in the Netscape lobby, when he marched in there to get a job. He nervously stood around for a while and then went home in quiet shame. That's Elon Musk before you knew him.
What if you have it backwards? The top VC firms stay the top VC firms if they attract and fund the best entrepreneurs. The best entrepreneurs are the best entrepreneurs regardless of which VC networks they tap.
First Capital realizes this, and is making a move to capture the important opportunities they would miss out on otherwise.
Well... maybe. Keep in mind that the way YC judges candidates involves spending almost no time evaluating any particular group, because they have so many to go through. Even those who get an interview only get 10 minutes to talk after which the interviewers spend 5 minutes making a decision before moving on to the next group -- and ~90% of those decisions are rejections. Since the interviewers don't actually have time to review the next team's application between interviews, much of the 10 minutes is spent introducing the idea and people from scratch.
It's an approach that has clearly worked very well for YC and you can't fault them for doing what works, but it's good that not everyone uses this approach since a lot of good ideas and good people would never get funded this way. It's also pretty costly for founders: each team spends hours or days putting together their application and potentially several days traveling to the interview (unless they're lucky enough to be in the bay area already), all for a few minutes of YC's time and a tiny chance of acceptance.
On the other hand, most VCs, if they're going to talk to you at all, will schedule a one-hour meeting, which they're happy to do over Skype if you aren't local. Meanwhile, getting an intro typically requires far less time investment on the part of the candidate compared to a YC-like application process (you just need someone to send a short email). But, yes, you have to get that intro, so if you don't have connections, it's a problem.
I don't think you can really say that either method is objectively more or less fair; they are simply different kinds of processes that have different kinds of bias and costs. I think it's important that YC exists as an opening for the large number of great teams who aren't well-connected, but I also think that if every VC worked like YC it would make fundraising much more costly for founders and a lot of great ideas and people that get funding today would not succeed under such a system.
Really, the best thing is for lots of VCs to be doing lots of different approaches, even if each one has biases.
> YC has had the field to themselves for a decade because no other firm actually believes the best people are outside their personal networks.
Unfortunately at scale YC operates today (~2,500+ submissions per batch) this is no longer true. It's simply too difficult to get through all of that noise without "knowing someone", and the exceptions to that rule are getting rarer every batch.
I don't think your lying, but I have to ask you this...do you believe it's genuinely possible to decipher startups merits alone from just an application?
Sam Altman has told me specifically why they didn't fund us the myriad times we applied.
Our founder split made them worried / didn't fit with their thesis. That seemed to be the only thing, based on our back and forth.
So, keep in mind that YC is looking for something very particular. It does strongly suggest however that YC is very open to taking teams they don't know as long as they fit their official and unofficial criteria. They make a serious effort to be transparent but they are also oberworked and are pretty much a black box to most startups they reject. They surely were for us, I just got lucky to get an answer.
When we make an accelerator, it'll also be based on a certain way of doing things. But it'll be very different. We believe that standardized platforms make a huge difference - YC has one as do other accelerators. But we have an actual software platform on which others can build their apps. It would be as if FB ran an accelerator program to develop new businesses on top of the FB platform. Our program could have actual measurable metrics to determine who is funded further and who is not.
This is not the case. Most companies YC funds do not come with alumni recommendations. Which in a way is surprising -- with 2000+ alumni, it's not that hard to meet one.
Hi tlb, thanks for your unique perspective! I didn't mean to imply that an actual alumni recommendation in the traditional sense was the norm, akin to perhaps a letter of recommendation for grad school. I admit, my comment "knowing someone" was quite ambiguous, so you probably thought that an official recommendation was what I implied.
Not true. At least not for this YC alum. I didn't know anybody. I learned about YC after stumbling across pg's essays. Decided to apply. Got an interview. I didnt even know there was an official notification day for application acceptance. Got accepted. No connections to anyone. Summer 2013.
Have a great idea, a great team, show some traction. Traction probably doesn't have to be revenue. Just find something that shows other people want what you're building. Great team means you're the best team for your idea. Not necessarily Ivy League school or Google/Facebook/Amazon employment.
Mostly only looking at startups with warm intros is a way of judging founders. If you can't figure out a way to get an introduction to a VC there are going to be a lot of things about running a company that you won't be able to figure out either.
I agree partially, I think the biggest factor here is that YC evaluates a given startup/set of founders against the backdrop of the other founders and then simply picks the strongest according to the metrics they have developed. You don't have to pick the winners, you have to eliminate the duds.
> Should everyone apply to First Round through the OpenApp?
> No. The best way to reach us is still through a referral.
I'm curious why even an "open application" has big bold lettering saying that referrals are favored over the application itself. Is spam really such a huge problem, or is this some sort of signaling mechanism?
Yes, the "signaling mechanism" is one of the oldest kind in civilization: if others you know & trust see something of value, then you give tremendous weight to that opinion.
A parent would rather hear about a good babysitter referred by a friend rather than watch 10 video presentations of babysitters that nobody in her circle knows. The same goes for finding doctors or lawyers. Your colleagues opinions on professionals they know will be more helpful than watching 10 videos from unknown attorneys. An investor is not any different in preferring referrals over videos.
Check out the importance that Larry and Sergey placed on being referred to Sequoia and how they needed help to make it happen. It is a story told by investor Ron Conway from one of the YC startup videos:
I think this initiative great for companies like mine who are outside the VC and Silicon Valley loop. However, I wish it was through a normal application process which uses a text-based application, followed by an interview in real life or on Skype. It's a huge extra level of stress to have to make a video for multiple questions with 30 seconds prep for each answer, with no human feedback, and with no chance of re-doing your answers. It's the equivalent of doing 18 Y Combinator one-minute videos live back to back with no chance of fixing mistakes. In fact, because I didn't know how the system worked and pressed the wrong button I've already screwed up the first question with no chance to fix it. I don't know if I should just give up already, or go through the rest of what is really an unnecessary painful process. Don't get me wrong, I've made videos for Y Combinator applications (one minute usually takes me and my partner at least ten tries) and am happy to talk on Skype, and of course do presentations in real life, but this format sucks.
Dude c'mon it is not giving up at all. It's more like realizing your own place in the world. Make it good!
According to some, investor class has already undergone some major disruption. And that's forcing them to think of better ways to not screw up. But what we're obviously going to see next is only more blood on the dance floor.
I've been involved in a First Round company since just before the A round. Generally against VC for my ideas. Kinda thinking just grow slow on the side as much as you can, more a lifestyle business. My time with a few VC backed companies has made me jaded I guess.
Hmm this seems like a waste of time. Very nebulous. You should focus on building your product and users instead. If you do that and succeed at it you'll be able to get a meeting with whoever you want.
Most investments come from warm referrals or investors you meet and build a relationship with. I would be surprised if this got you a serious meeting with a partner who can make a decision.
How is this different than YC you ask? YC makes their terms clear and upfront (120k for x%) and has a whole process for reviewing all the applications you send in. Not only that, it is in YC's best interest to introduce you to other investors.
The Angel List application process is horrible. Surprisingly horrible. It pastes all of your private answers to your public profile without even asking, it sends no confirmation emails when you submit, it's junk. Feels like something an intern coded up in a day and then abandoned. Would not recommend.
On a side note, I've grown be highly suspicious of any accelerator / VC that refuses to create their own form, and instead uses Angel List / F6S for the forms. If they're that lazy, I'll bet that you're dealing with the used car salesman kind of VC.
For the startup conference, we rely on AngelList for a couple of reasons. The main one is that it's unfair to startups to have each incubator use their own form. Founders have better things to do than fill out yet another form. On AngelList at least, you fill out their questions once, and you can re-use your company profile for many opportunities.
The second reason is that the questions they ask are the right ones. We don't want to read a long executive summary, we need a quick intro video of the founders and/or the product, a paragraph on what you are trying to build, and any details on traction if you have some. Not a 4-page executive summary with 5-year bogus financial forecast (like older angel platforms used to ask).
AngelList dev here. FWIW, we do have a shared set of application questions which also appear (with limited visibility) on your profile, but any accelerator-specific questions are kept private to that application. We also do send confirmation emails (though that wasn't always the case) :)
The First Round team doesn't seem very diverse. Lots of white men, white women and a few Asian ladies. Not a single Asian male. Is there a glass ceiling?
But, the current makeup of the team (presumably) indicates that the hiring process didn't rely on venues where other nationalities/races predominate. You might respond that the team hired the best candidates available - which could indeed be true - but GP's point is worth raising, if inelegantly phrased.
Why not? What's wrong with a campaign wanting "more Asian males in leadership roles instead of non-client-facing engineering roles"?
Isn't that why Intel has put $300 million into diversity hiring[1]?
Isn't that why we have campaigns like "Black girls can code"?
Isn't that what Ellen Pao is trying to do at Reddit[2]
> She has eliminated salary negotiations from the hiring process because women often end up fairing worse in terms of pay. She has hired a well-known diversity consultant to advise Reddit. She has passed over candidates who are not committed to gender and racial diversity, according to the interview.
This is nice to see and is a step to breaking down the ivy league snob high school mentality that Ive experienced with some VCs.
Case in point a VC whose east coast venture recently imploded was speaking at a conference. After the conference ended entrepreneurs started to approach and pitch him. He acted like he was king crap and he didn't to be bothered by entrepreneurs, but umm that's what he signed on for. He even later made a rude remark on Twitter about an entrepreneur he just met(didn't name names).
VCs like him... please get over yourself, be humble/nice and don't be D*&K! Because one day like the VC I noted above, your on cloud 9 and the next you look like a fool/complete failure in front of the community!
I know some people in (1) the top of
business in the US, (2) high end US
research academics, and (3) information
technology (IT).
(A) Bluntly likely none of those people
knows anyone at First Round Capital. (B)
Bluntly, with the exception of Howard
Morgan, the qualifications of the people
at First Round Capital in business,
research academics, and technology are not
high enough to be respected by the people
I know. Net, the people at First Round
Capital and myself know nearly none of the
same people.
Moreover, for my technology startup, there
is no one at First Round Capital with
business, academic, or technology
qualifications good enough for me to hire
for a significant position.
I'd have a tough time respecting any of
them to take their advice on my startup.
Once, just once, I did call a person I
know, the founder, COB, CEO of a major,
world famous company and asked for an
introduction to his CIO. The CIO and I
talked and had a nice review of history, and
he gave me an introduction to a partner at
a venture firm with a partner on the BoD
of the company. Net, the introduction
meant nothing -- the venture partner paid
no attention to the introduction or my
project at all; we did communicate but
just as in a cold call.
I never again wanted to bother any of the
high end people I know, bother them to
introduce me to a venture firm just to
get past some absurd hoop the venture
firm erected but ignored.
Net, venture firms who want
introductions get put at the bottom of
my list; the venture partners and I nearly
never know or respect the same people; I'm
not going to pester the good, important
people I know and respect to have them
waste their time communicating with people
as poorly qualified in business, research,
and IT as all but a small number of
venture partners. No way.
Next, in contacting venture firms just via
cold calls, I've had little trouble
getting through and getting a response
including several hour long conference
calls. In particular well known venture
partners at well known venture firms are
aware of my work on my project, all
without any introductions.
Net, it appears to me that introductions
are not really necessary and not very
helpful.
What was helpful was having a team: For
a while I did that, but too soon I
encountered the common problem --
disputes. So, now I'm a solo founder.
There are some serious advantages being a
solo founder, but it does appear that
getting a phone conversation with a
venture partner as a solo founder is more
difficult. For whatever reasons, venture
firms don't like solo founder startups.
Moreover, it appears to me that, really,
venture firms have their feet locked in
concrete that, with only some rare
exceptions, they just will not pay much
attention to an IT startup before the
software is developed and there is
significant traction growing rapidly.
E.g., venture partner Fred Wilson at his
Union Square Ventures recently made it
clear on his blog AVC.com that he just
will not fund software development. Okay
by me.
"This is the new normal: fewer engineers
and dollars to ship code to more users
than ever before. The potential impact of
the lone software engineer is soaring.
How long before we have a billion-dollar
acquisition offer for a one-engineer
startup? How long before the role of an
engineer, artisanally crafting custom
solutions, vanishes altogether?"
So, Andreessen-Horowitz is admitting the
possibility of a solo founder creating a
billion dollar startup.
I don't see just why not: Venture firms
want the code written and traction
significant and growing rapidly. If the
startup is ad supported, then it d...
51 comments
[ 1.8 ms ] story [ 86.8 ms ] threadSeries A rounds are typically slightly north of 5 million. It's hard to make out, but seed rounds seem to average some fraction of a million.
So the characterization of 1-3 million rounds as "seed" does seem odd.
Other VCs want to believe in "proprietary deal flow" and their own ability to worm into hot companies. Probably because it seems more a sure thing than, gasp, actually judging startups on their merits, like YC at least tries to do.
> Should everyone apply to First Round through the OpenApp?
> No. The best way to reach us is still through a referral.
The idea that the best entrepreneurs are good at things like personal networking, or ladder climbing, is clearly false.
One example: Elon Musk didn't have the "hustle" to talk to anyone in the Netscape lobby, when he marched in there to get a job. He nervously stood around for a while and then went home in quiet shame. That's Elon Musk before you knew him.
First Capital realizes this, and is making a move to capture the important opportunities they would miss out on otherwise.
It's an approach that has clearly worked very well for YC and you can't fault them for doing what works, but it's good that not everyone uses this approach since a lot of good ideas and good people would never get funded this way. It's also pretty costly for founders: each team spends hours or days putting together their application and potentially several days traveling to the interview (unless they're lucky enough to be in the bay area already), all for a few minutes of YC's time and a tiny chance of acceptance.
On the other hand, most VCs, if they're going to talk to you at all, will schedule a one-hour meeting, which they're happy to do over Skype if you aren't local. Meanwhile, getting an intro typically requires far less time investment on the part of the candidate compared to a YC-like application process (you just need someone to send a short email). But, yes, you have to get that intro, so if you don't have connections, it's a problem.
I don't think you can really say that either method is objectively more or less fair; they are simply different kinds of processes that have different kinds of bias and costs. I think it's important that YC exists as an opening for the large number of great teams who aren't well-connected, but I also think that if every VC worked like YC it would make fundraising much more costly for founders and a lot of great ideas and people that get funding today would not succeed under such a system.
Really, the best thing is for lots of VCs to be doing lots of different approaches, even if each one has biases.
Unfortunately at scale YC operates today (~2,500+ submissions per batch) this is no longer true. It's simply too difficult to get through all of that noise without "knowing someone", and the exceptions to that rule are getting rarer every batch.
Source - ask any YC Alumni candidly.
Our founder split made them worried / didn't fit with their thesis. That seemed to be the only thing, based on our back and forth.
So, keep in mind that YC is looking for something very particular. It does strongly suggest however that YC is very open to taking teams they don't know as long as they fit their official and unofficial criteria. They make a serious effort to be transparent but they are also oberworked and are pretty much a black box to most startups they reject. They surely were for us, I just got lucky to get an answer.
When we make an accelerator, it'll also be based on a certain way of doing things. But it'll be very different. We believe that standardized platforms make a huge difference - YC has one as do other accelerators. But we have an actual software platform on which others can build their apps. It would be as if FB ran an accelerator program to develop new businesses on top of the FB platform. Our program could have actual measurable metrics to determine who is funded further and who is not.
Source - YC partner.
Have a great idea, a great team, show some traction. Traction probably doesn't have to be revenue. Just find something that shows other people want what you're building. Great team means you're the best team for your idea. Not necessarily Ivy League school or Google/Facebook/Amazon employment.
I'm curious why even an "open application" has big bold lettering saying that referrals are favored over the application itself. Is spam really such a huge problem, or is this some sort of signaling mechanism?
A parent would rather hear about a good babysitter referred by a friend rather than watch 10 video presentations of babysitters that nobody in her circle knows. The same goes for finding doctors or lawyers. Your colleagues opinions on professionals they know will be more helpful than watching 10 videos from unknown attorneys. An investor is not any different in preferring referrals over videos.
Check out the importance that Larry and Sergey placed on being referred to Sequoia and how they needed help to make it happen. It is a story told by investor Ron Conway from one of the YC startup videos:
https://www.youtube.com/watch?v=uFX95HahaUs&feature=youtu.be...
https://www.youtube.com/watch?v=1z87RGFGuxQ&feature=youtu.be...
According to some, investor class has already undergone some major disruption. And that's forcing them to think of better ways to not screw up. But what we're obviously going to see next is only more blood on the dance floor.
Sit back. Enjoy your work.
Most investments come from warm referrals or investors you meet and build a relationship with. I would be surprised if this got you a serious meeting with a partner who can make a decision.
How is this different than YC you ask? YC makes their terms clear and upfront (120k for x%) and has a whole process for reviewing all the applications you send in. Not only that, it is in YC's best interest to introduce you to other investors.
On a side note, I've grown be highly suspicious of any accelerator / VC that refuses to create their own form, and instead uses Angel List / F6S for the forms. If they're that lazy, I'll bet that you're dealing with the used car salesman kind of VC.
The second reason is that the questions they ask are the right ones. We don't want to read a long executive summary, we need a quick intro video of the founders and/or the product, a paragraph on what you are trying to build, and any details on traction if you have some. Not a 4-page executive summary with 5-year bogus financial forecast (like older angel platforms used to ask).
http://firstround.com/people
But, the current makeup of the team (presumably) indicates that the hiring process didn't rely on venues where other nationalities/races predominate. You might respond that the team hired the best candidates available - which could indeed be true - but GP's point is worth raising, if inelegantly phrased.
Isn't that why Intel has put $300 million into diversity hiring[1]?
Isn't that why we have campaigns like "Black girls can code"?
Isn't that what Ellen Pao is trying to do at Reddit[2]
> She has eliminated salary negotiations from the hiring process because women often end up fairing worse in terms of pay. She has hired a well-known diversity consultant to advise Reddit. She has passed over candidates who are not committed to gender and racial diversity, according to the interview.
[1] http://fortune.com/2015/01/12/intel-diversity/ [2] http://money.cnn.com/2015/04/06/technology/ellen-pao-reddit-...
> Should everyone apply to First Round through the OpenApp?
> No. The best way to reach us is still through a referral.
Outcome: Zilch.
Case in point a VC whose east coast venture recently imploded was speaking at a conference. After the conference ended entrepreneurs started to approach and pitch him. He acted like he was king crap and he didn't to be bothered by entrepreneurs, but umm that's what he signed on for. He even later made a rude remark on Twitter about an entrepreneur he just met(didn't name names).
VCs like him... please get over yourself, be humble/nice and don't be D*&K! Because one day like the VC I noted above, your on cloud 9 and the next you look like a fool/complete failure in front of the community!
(A) Bluntly likely none of those people knows anyone at First Round Capital. (B) Bluntly, with the exception of Howard Morgan, the qualifications of the people at First Round Capital in business, research academics, and technology are not high enough to be respected by the people I know. Net, the people at First Round Capital and myself know nearly none of the same people.
Moreover, for my technology startup, there is no one at First Round Capital with business, academic, or technology qualifications good enough for me to hire for a significant position. I'd have a tough time respecting any of them to take their advice on my startup.
Once, just once, I did call a person I know, the founder, COB, CEO of a major, world famous company and asked for an introduction to his CIO. The CIO and I talked and had a nice review of history, and he gave me an introduction to a partner at a venture firm with a partner on the BoD of the company. Net, the introduction meant nothing -- the venture partner paid no attention to the introduction or my project at all; we did communicate but just as in a cold call.
I never again wanted to bother any of the high end people I know, bother them to introduce me to a venture firm just to get past some absurd hoop the venture firm erected but ignored.
Net, venture firms who want introductions get put at the bottom of my list; the venture partners and I nearly never know or respect the same people; I'm not going to pester the good, important people I know and respect to have them waste their time communicating with people as poorly qualified in business, research, and IT as all but a small number of venture partners. No way.
Next, in contacting venture firms just via cold calls, I've had little trouble getting through and getting a response including several hour long conference calls. In particular well known venture partners at well known venture firms are aware of my work on my project, all without any introductions.
Net, it appears to me that introductions are not really necessary and not very helpful.
What was helpful was having a team: For a while I did that, but too soon I encountered the common problem -- disputes. So, now I'm a solo founder. There are some serious advantages being a solo founder, but it does appear that getting a phone conversation with a venture partner as a solo founder is more difficult. For whatever reasons, venture firms don't like solo founder startups.
Moreover, it appears to me that, really, venture firms have their feet locked in concrete that, with only some rare exceptions, they just will not pay much attention to an IT startup before the software is developed and there is significant traction growing rapidly. E.g., venture partner Fred Wilson at his Union Square Ventures recently made it clear on his blog AVC.com that he just will not fund software development. Okay by me.
But at
http://a16z.com/2014/07/30/the-happy-demise-of-the-10x-engin...
with
"The Happy Demise of the 10X Engineer"
By Sam Gerstenzang
is in part:
"This is the new normal: fewer engineers and dollars to ship code to more users than ever before. The potential impact of the lone software engineer is soaring. How long before we have a billion-dollar acquisition offer for a one-engineer startup? How long before the role of an engineer, artisanally crafting custom solutions, vanishes altogether?"
So, Andreessen-Horowitz is admitting the possibility of a solo founder creating a billion dollar startup.
I don't see just why not: Venture firms want the code written and traction significant and growing rapidly. If the startup is ad supported, then it d...