How to get VCs to fight over to invest your startup and examples of Rewind AI, PrivateGPT and Krea.AI

How best founders raise capital

Hey everybody welcome back to another article of Product Market Fit 💡📈!!

I hope you all had a great weekend and are ready to crush next week!!

Today I want to talk about how top startups get VCs lined up to invest in them and how you can do it as well

DISCLAIMER: Please excuse my writing today, I’m finishing this article late at night and my train of thoughts might be a little bit crazy :)

But not before some good beats. Shoutout to Marc Rebillet, the funniest musician out there and the craziest talent 🧯

Btw, we are almost 2K tunning every week to PMF! That is crazy.

Just so you have an idea of how many people 2k are, it’s twice the people in this picture👇

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So, let’s talk the real deal:

Have you wondered how some startups

Raise big amounts of capital…

With the best investors…

Really quickly?

And still, you’ve been with your startup trying to raise capital for a long time and can’t close that round.

First some basic knowledge 👇

1. Supply and demand

Fundraising follows the same rules as any free market: supply and demand.

The more investors that want to invest in your startup the more negotiating power you have and the higher de valuation you’ll be able to drive.

2. There aren’t many startups to invest in

Let that sink in…

Ok, maybe I’m using too many memes but my point is: for Venture Capitalists is not that easy to find companies to invest in because there are a limited amount of great companies and there is a lot of competition.

Most Venture Capitalists invest in a particular type of company at a particular stage in a particular geography, and after having been in the ecosystem for a while, they will know almost every company in that space and will run out of companies to invest at.

This sounds a little bit extreme but it truly happens, and it has 3 implications:

1. VCs know what companies they don’t like

2. VCs say no to companies and after a while they cand decide to invest because “there’s been some progress” but really because they can’t find better deals

3. VCs start fighting over the few new, good opportunities (good, not just great)

How to win? 4 Steps

1. Create momentum

Metrics, metrics, metrics, of any kind.

Depending on the stage of your startup and your business model you’ll have a North Star Metric.

Show how your North Star Metric grows and you’ll create momentum

2. Create massive demand

Use the momentum to market your company.

You have the metrics, now you have to get them seen by investors.

Now, there are many ways for you to do this, but the more creative you are the better. Use the power of the internet, after all you are a startup - which they used to call internet businesses.

Some people talk create demand by sharing their progress on linkedin, some create big communities on twitter and others go to startup events.

The more demand you can generate at the same time the better.

3. Sense of urgency

You as a founder need to lead the timings of the round. It’s not up to investors

4. Close

Always be closing. Find a lead investor, close it, move on.

3 examples of startups that created massive demand from investors

1. Rewind AI

2. Zylon

Zylon, previusly Private-GPT went viral on Git Hub getting more than 30k stars. This attracted investor’s interest and

3. Krea AI

Similar to PrivateGPT, Krea launched an MVP on twitter that got lot’s of traction and after going to an incubator the founders raised a round with Google.

Whole story here

And for the premium founders 🐺:

• the best resource to find investors

• one of the most complete and informative essays about startups ever. This stuff is better than any YC or Paul Graham’s content.