Brian Vallelunga

TWO OR THREE-STEPPING TO SERIES A A lot of software founders are still trying to raise a $4-5M seed round from a pre-revenue standpoint to get to Series A. I get that we all want more buffer nowadays but it's also a harder calculus to go from pre-monetization, to early customers, to giving yourself enough sales cycle time in order to hit $1-2M ARR proxy for a strong A. Which is why inevitably, more founders end up having to raise messy extensions/bridges/Seed II or whatever you want to call them. So my advice is that IF you have the luxury of starting a company today, PLAN AHEAD. Even prior to even raising your first angel round. Break up your path to Series A into 2 or 3 tranches of mission-driven capital. Each tranche has a clear goal that you can rally your team and investors around. For example: First tranche to build the product and get early design partners. Second tranche to get to $300K of ARR. Third tranche to get to Series A. This will help support higher operating discipline and awareness. Incremental purchasing and hiring decisions will instantaneously shorten your runway in a way that a larger $5 million seed round obfuscates. And you'll be motivated to find GTM efficiency faster in the journey. Great habits for long term success. For context, Peter Walker of Carta recently sent an update on the arduous path from Seed to Series A. The survival rate is about 1/2 of what it used to be: "Something like 20-24% of startups that raised a seed round would graduate to their Series A in 24 months or less. For companies that raised their seeds in H1 2022, only 13% have made it to Series A across the 6 industries in the chart."

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Watching YC's Fall '24 batch, we're seeing a fundamental transformation in how companies scale. A few key observations: Development cycles are compressing. In F24, a developer tool reached $102K ARR within three weeks of launch. This isn't an outlier either, in the batch we also saw examples of... $655K ARR, growing >10% week-over-week $1.6M ARR, growing 23% month-over-month $670K ARR in 2 months Capital Efficiency will be the new normal as the traditional startup playbook is being rewritten: Zapier (YC S12): Reached hundreds of millions in ARR after only seed funding Baubap (YC S21): Achieved $100M+ revenue and profitability with single seed round SoloSuit (YC W21): Showing similar capital-efficient growth trajectory 🔄 Why This Matters... - Seed rounds might become the dominant form of venture capital (as Chamath recently noted on All-In) - The 18-24 month seed-to-Series A timeline is compressing - Companies can reach $1M+ ARR with small teams and minimal capital The new challenge is... Speed to defensibility > Speed to market With lower barriers to entry, competitive advantages must be built faster. The winners aren't just those who get there first, but those who build lasting moats quickly.

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YC application tip: never ask a YC founder you don't know to recommend you. It should be somebody who worked with you or knows you well. YC is much more interested in a person rather than the idea they're applying with. You can change the idea, but not the person.

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7 RECOMMENDATIONS FOR HARDWARE STARTUPS It’s hard to understate the difficulty of the v1 launch of a consumer hardware company. I see a ton of new HW startups coming out. Here are some counterintuitive recommendations… 1) Target a small market for v1, not a large market. You need a small number of people to love your product and this will earn you the right to build a v2. You have to understand your v1 will not make you a successful company. Your v1 needs to prove that you deserve to exist in the first place. In the case of WHOOP, we started with pro athletes who were willing to put up with our v1’s short battery life and flaky Bluetooth connections because they so desperately needed Sleep and Recovery data. A broad consumer base would have rejected it. 2) Be great at no more than 1-3 things. If you try to be great at more than that, you will build a hardware that is mediocre at a wide range of things. You won’t think it’s going to be mediocre, but it will be. 3) You want a small launch. Not because you want small sales but because you want to have a steady ramp. It’s much better to do 100k of sales steadily over 12 months than in 2 months with a huge drop off. Keep in mind you need to manage your manufacturing partner and that there’s nothing better or more efficient than steady and predictable. 4) CAC is your enemy. Referrals are gold. The magic of referrals is that they signal high NPS and they help you grow steadily. Again everything that helps you have a steady HW manufacturing plan is good. Building a referral program for v1 launch is a good use of your time. 5) Be excellent at Software. Turns out being good at both Hardware and Software is a hard thing and something that your BIG COMPANY competitor is actually not great at (excluding Apple here). For some reason, there’s such a magnifying glass on the Hardware development, that Software is then overlooked by consumer startups. Don’t make that mistake. You can be great at both. 6) You should spend an unreasonable amount of time and money on ONE aspect of your Hardware. Could be the design or a technical breakthrough. But something needs to be SPECIAL. In our case, we designed a modular battery pack that allowed Whoop to be charged without taking it off your body. This made our development timeline much longer, but it allowed us to achieve something that no other wearable has achieved since: 24/7 health data. 7) Finally, have an unrealistic belief in yourself and your team. You are not supposed to succeed and the odds are stacked against you. Building hardware takes confidence and you’re up against big players who will rip you off. We went so far as to leave a message for our competitors on our circuit board (pictured below). In the case of Amazon and others, the prophecy came true. If you’re building consumer hardware, I wish you nothing but success. It will be super hard, but super rewarding. Good luck 👊🏼 #consumer #hardware #wearable #startup #whoop

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In this week's episode of the Mobile Dev Memo podcast, I speak with Niels Hoven, the CEO of Mentava, about the specific design considerations required in building apps for kids. To listen, search for "Mobile Dev Memo" wherever you consume podcasts.

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What do VCs actually look for in pre seed deals, particularly given the recent wave of AI startups? As a B2B SaaS focused investor, I have the opportunity to evaluate thousands of software businesses, and invest in 100+ each year. One of my favorite parts of my job is meeting exceptional founders and learning about problem spaces that are completely new to me, but the investment team at Forum Ventures spends a lot of time discussing focus areas and opportunities where we see the most promise and are actively looking to invest. In the coming weeks, I'll be sharing a series of market opportunities where I am looking to back exceptional founders solving challenging problems.  * Automation of complex, legacy workflows within enterprise, particularly across regulatory and compliance use cases. * Application of AI across the defense and broader government sectors, specifically related to operational efficiencies, the infrastructure stack required to leverage cutting edge AI advancements, and the development and adoption of autonomous systems. * Manufacturing/hardware design and production, spotlighting modern manufacturing - robotics, aerospace, alternative energy, medical devices, etc. * Complex manufacturing supply chains- from extraction to processing and refining, and ultimately through manufacturing and distribution.  If any of the above sounds like something you are building, let’s connect. #GenerativeAI #VentureCapital #EarlyStageStartups #Innovation #TechTrends #AI

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Think PMF is the Holy Grail for scaling your startup? Think again. Finding Product-Market Fit (PMF) is just the tip of the iceberg. While it’s crucial, it’s not sufficient for scaling to a whopping $100M in Annual Recurring Revenue (ARR). Inspired by Brian Balfour's insightful framework, here’s what you really need to steer your startup towards colossal success: the Four Fits. Here's the breakdown: 1. Market/Product Fit: Like PMF, but deeper. Solve a significant problem in today's market with your product. If your product nails a current need, you're starting right. 2. Product/Channel Fit: Develop channels that showcase your product to its audience effectively. Fancy tech means nothing if no one knows about it. A fantastic product without robust distribution channels will linger in the shadows. 3. Channel/Model Fit: Balance acquisition costs with revenue. Are your channels bringing in users profitably, or are you hemorrhaging cash to capture a dollar? Misaligned strategies or monetization models might be the culprits. Reassess. Pivot. Profit. 4. Model/Market Fit : Align your pricing and revenue structure with market expectations. You could have a stellar product, but if no one wants to pay for it, adjustments are needed. Scrutinize the pricing, structure, and buying behavior. If you have Stalled Growth? Analyze these Fits! Your be-all-and-end-all PMF might be shining, but something else might not be clicking. Dive into these other fits, find the conflict, and you’re on your way. Each fit reinforces the next. Achieve synergy, and the route to massive scale unveils itself. Let's build stronger, more resilient companies that don't just aim for PMF, but master the Four Fits to truly thrive. Embrace these insights from Brian Balfour’s framework today and unlock your startup's full potential! Original post by : Majd Alaily Repost by : Salem Bagami Chief Executive Officer Digital Transformation Company & Managing Director 2080 Ventures Email: [email protected] Website: www.2080.ventures #StartupGrowth #BrianBalfour

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Technical founders don't go to "founder school," so they really don't understand the inertia they're fighting when launching a startup. The barrier to entry for launching new products is at an all time low. Tons of developers are creating projects as a side hustle. The ability to gets folks attention is also at an all time low. Email deliverability, responses, etc. Ads, social media posts. Cold calls. We are bombarded with information thousands of times a day. Your product might be amazing. It might be world-changing. But if you can't figure out how to get people to pay attention to you, talk to you, try your product, or go through a sales cycle, then you don't exist. You're a phantom startup. You're there, but can't be seen. And then you just run out of cash and have to shut down. 95% of an entrepreneurs time is spent on sales and marketing. As a technical founder, you're getting in the world of entrepreneurship. You're quitting your tech job to become a sales person. Let that sink in. You thought you were escaping your 9-5. You're coding on your own. You get to build your product, your way. No more boss to respond to. No more corporate politics. Sure you leave that behind. But the biggest role you pick up is sales. When I hear about technical founders who get discouraged because they "sent 10 prospecting emails" and nobody responded? Guess what, you'll need to send thousands. When I hear about technical founders who get discouraged because someone said no after they demoed? Guess what, you'll need to face that rejection a thousand times. This is the reality of being a founder. It's not easy. And most folks get discouraged before they even do 1% of what it takes to get noticed.

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Technical founders don't go to "founder school," so they really don't understand the inertia they're fighting when launching a startup. The barrier to entry for launching new products is at an all time low. Tons of developers are creating projects as a side hustle. The ability to gets folks attention is also at an all time low. Email deliverability, responses, etc. Ads, social media posts. Cold calls. We are bombarded with information thousands of times a day. Your product might be amazing. It might be world-changing. But if you can't figure out how to get people to pay attention to you, talk to you, try your product, or go through a sales cycle, then you don't exist. You're a phantom startup. You're there, but can't be seen. And then you just run out of cash and have to shut down. 95% of an entrepreneurs time is spent on sales and marketing. As a technical founder, you're getting in the world of entrepreneurship. You're quitting your tech job to become a sales person. Let that sink in. You thought you were escaping your 9-5. You're coding on your own. You get to build your product, your way. No more boss to respond to. No more corporate politics. Sure you leave that behind. But the biggest role you pick up is sales. When I hear about technical founders who get discouraged because they "sent 10 prospecting emails" and nobody responded? Guess what, you'll need to send thousands. When I hear about technical founders who get discouraged because someone said no after they demoed? Guess what, you'll need to face that rejection a thousand times. This is the reality of being a founder. It's not easy. And most folks get discouraged before they even do 1% of what it takes to get noticed.

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7. That's the median employee headcount for SaaS companies under $1m in ARR. Nearly half of those positions are in engineering. I'm often asked about headcount planning and it's so helpful to provide data to drive decisions. The High Alpha SaaS Benchmark Survey is live and it's full of data like this. Download the report now. (Link in the comments)

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Founders, waitlists don't work unless you talk about your product somewhere else or offer some type of lead magnet. Nobody cares about getting updates. That's not enough of a value exchange. Just published my latest teardown (search Roast My SaaS on YT) about a startup with a huge missed opportunity to capture leads & onboard them. Too bad the video is a little over 15 minutes and LinkedIn doesn't allow me to publish it here as well. #buildinpublic

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Here are 5 founders who have leveraged writing to amplify their voice. Paul Graham, co-founder of YC Joel Spolsky, co-founder of Stack Overflow Tom Preston-Werner, co-founder of GitHub Patrick Collison, CEO and co-founder of Stripe David Heinemeier Hansson - Creator of Ruby on Rails and co-founder of Basecamp Why would a founder ignore the immense power of words? Discover the art of storytelling to captivate your audience. Here's the secret. The craft of storytelling goes beyond just sharing facts; it builds emotional connections. Human beings are wired to respond to stories. They evoke emotions, create a sense of belonging, and make abstract concepts relatable. Storytelling isn't just an option; it's a necessity. By weaving storytelling into your personal brand, you can make your message more memorable and impactful. It gives people a reason to care about what you're doing, to root for your success, and to be part of your journey. So, how do you transform your message into a captivating narrative? It starts with authenticity. Speak from the heart. Share your challenges, your victories, and the lessons you've learned along the way. Show the human side of your brand. Want to dive deeper and elevate your personal brand? DM me "Grow" and see if we are a fit to help you.

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I saw a rare example of bad advice from YC recently. They told folks that it doesn’t matter if you’re passionate about your company’s product / mission. While that’s fine from the #VC’s perspective, as lots of enterprise b2b applications are extremely profitable, which was their point. And their business is driven by repeatably successful actions. Growing a b2b business in their wheelhouse, with their network is definitely a successful and repeatable activity. However … most people should not even be an #Entrepreneur. Let alone a founder of a VC-backed startup. The lifestyle will make them miserable. To be a successful #founder, you need to be motivated to get up and work on your company 10+ hours a day, 7 days a week. It’s all-consuming. Usually for an entire decade. So focusing on a product and customers that you don’t care about … that will compuound the personal pain and build a personal hell. I’ve seen that happen to a number of my friends and associates over the years, even when they were seen as tremendous successes. Focus first on what matters the most … your happiness. That includes solving a problem that you’re excited about. But only if you’re actually an entrepreneur. Before you dive into being a business owner…figure out if that lifestyle is for you.

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Many assumed that the industry would be well on its way to AGI or superintelligence before AI model builders’ efforts to take advantage of scaling laws might hit a wall. Recent headlines are chipping away at that assumption. One question I've been getting in my inbox: is this the era of diminishing returns for AI? We don't think so. Even if an avalanche of new clusters and synthetic data fail to deliver significantly better model performance, there are good reasons to believe that AI is still going to become orders of magnitude more powerful in the coming years — powering a new generation of startups and ultimately productivity growth and positive benefits for mankind. In fact, with agents and reasoning just beginning to scale and thousands of industry-specific models coming online, it's about to get really exciting. Read our latest blog post on the topic: https://lnkd.in/gFhniNX8

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YC Startup Playbook by Sam Altman. 🔑 Key Takeaways: User Love: Focus on creating a product that your users love. Early adopters who are passionate about your product will be your biggest advocates. Great Team: Building a formidable team is crucial. Look for co-founders who complement your skills and share your vision. Execution: Consistent and intense effort over a long period is essential. There are no shortcuts to success. Adaptability: Be ready to evolve based on user feedback. Flexibility can be a game-changer. Persistence: The journey is tough, but resilience is key. Never give up too quickly. 📈 Top Advice: Communicate Clearly: Your idea should be clear and exciting from the get-go. Start Small: It’s better to have a small group of users who love your product than a large group who just like it. Stay Frugal: Be generous with equity but frugal with everything else. Compensate great people with ownership in the company. Ignore Competitors: Focus on your internal growth and product quality rather than what others are doing. 🔥 Pro Tip: "Do things that don't scale" in the early days. Offer exceptional customer service and gather insights to continuously improve your product. #StartupSuccess #YCombinator #Entrepreneurship #GrowthMindset #Innovation 🔔 Follow me for insightful and entertaining posts about #Startups #VentureCapital #Entrepreneurship. ------ 🎁 Get investor lists, free resources, and services for your fundraising:  https://lnkd.in/g4ygxG6i ------ 🤝 Find your co-founder: https://lnkd.in/e9DyVmkE 

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Founders underestimate how hard sales will be. They index heavily on getting the product "right." They ask for feedback from friends. They try and get design partners that will use the software for free. And they'll spend months, or maybe even over a year doing this. They'll often try to start a PLG motion, not realizing that they don't really exist. And they'll need a TON of marketing and awareness just to get a handful of leads. And they'll need HUNDREDs of signups to understand an onboarding flow. So then they go out to "sell" what they have. And nobody is buying. So they start blaming prospects that "don't get it." They start making excuses for why things aren't working. Instead of facing the hard reality... They built something that's cool, or nice to have. But folks aren't willing to pay money for. Because the problem they're trying to solve isn't a real problem. Or if it is, it's not a painkiller type of problem. You can figure this out pretty quickly when you're running a sales-led motion. You reach out to folks in your ICP explaining the problem in detail, and gauge responses. You run sales calls probing for pain and how it impacts the rest of the business. You demo using Context > Problem > Capabilities > Show > Ask framework to put your software in their world, to make sure it actually solves the problem they have. You follow-up diligently outlining the pains they've mentioned. You charge something - ANYTHING - to get paid users, and not free advice. You get feedback from your initial users, and decide to change your product. Make it better. Solve the problem better. Sell. Build. Sell. And you use this cycle to get your startup off the ground. Sales isn't just about closing deals in the early stages. It's also about understanding the market and the pain you're solving. Deeply. There's no way around it. You need to talk to folks who are willing to pay you money for the advice to be real. And you do this through running a sales process. So start upskilling on sales now. Even before your MVP is "ready." And get that product in front of real prospects as fast as possible. And get your first paid user as fast as possible. Waiting will crush you. Your cash burn will be too high. You'll run out of time.

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There’s a relatively famous line from Bezos, circulated first at YC in ’08 and then more recently by the folks at Acquired (a great pod!): "Jeff uses this analogy for AWS. He talks about European beer breweries around the turn of the 20th century. Electricity has just been invented. This was this massive enabling technology. Breweries could now brew vastly more quantities of beer than you could before electricity. The first breweries to adopt it built their own power generators. It worked fine for a few years but it was super capital intensive. Then the utilities companies came along and the next generation of breweries just rented the power from the utilities companies. They beat the first generation of breweries because guess what: whoever makes your electricity has no impact on how your beer tastes." “Focus on what makes your beer taste better” is a great slogan, and the kind of MBA-ism that makes you feel slightly cleverer for having said it. But it’s always rubbed me the wrong way, for two reasons: 1. As far as I can tell, the metaphor has no basis in reality. There is no cohort of once-large brewery that got extinguished in the early 20th century. I’m not sure it even makes sense if you think about it for more than a few minutes. 2. Bezos is deploying this metaphor in the context of AWS, a service entirely orthogonal to the “beer” that Amazon was selling in the early aughts prior to EC2. Metaphors can entertain and enchant but they’re rarely accurate. Bezos wanted to sell people on using AWS; he told a famous story about why they should use AWS, and the lesson there is in sales, not operations. Software businesses are not much like turn-of-the-century Bavarian breweries; you may want to use AWS, you may want to use Clerk and Vanta and outsource large swathes of your business and you may be correct, but Seattle and Portland and San Diego and Richmond are littered with breweries who made a great product but couldn’t quite get the business part figured out, either.

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