Is fundraising ability at the earliest stage a reliable signal of founder quality?

Rick Zullo · Aug 23, 2023

There is little correlation between founders who are great at raising money at seed and founders who are great at building a business; the great builders become decent pitchers over time

In his portfolio's markets, where customer bases differ sharply from enterprise SaaS, he simply hasn't observed the correlation

Scope: based on what his firm sees; seed stage; markets with non-enterprise customer bases

34:19 20VC: NEW FORMAT: Mega Funds Will Come Back, Why Markups Have Corrupted VC, Why RIFs Should Always Be An Embarrassment To SaaS Founders and Why Pitching is BS and Fake with Jason Lemkin and Rick Zullo

Shardul Shah · Sep 16, 2024

The best founders do not start out as the best fundraisers, though they can evolve into great fundraisers.

Olivier at Datadog's Series A was not a great fundraiser — which was fortunate — and only became one over time; being a great fundraiser means having multiple options in a short span.

Scope: defining 'great fundraiser' as having multiple offers quickly

18:51 20VC: Index's Shardul Shah on Why Market Size is a Trap | Biggest Lessons on Pricing from Leading Rounds in Wiz & Datadog | Why Benchmarks & Averages in VC are BS | How Index Makes Decisions and Why Growth & Early are the Same Investing Style

Jason Lemkin · Nov 30, 2022

Filtering deals on email quality has a real cost: you will miss generational companies whose founders write bad emails

The monday.com founders sent him a terrible inbound email with a bad company name and generic ask, and he ignored it

4:42 20VC: Jason Lemkin on Why Founders Do Not Care About Their VCs Anymore, Why Zoom Made Us All Worse Investors, Why 80-90% IRR Should Have Been Warning Signs and the Algolia Journey From Seed to $2.25BN Valuation

Jason Lemkin · Aug 23, 2023

Screening founders on the quality of their first email and pitch buys enormous efficiency, at the cost of missing generational companies whose early pitches were terrible

The monday.com founders sent him one of the worst pitch emails he ever received and he didn't even take the meeting, yet they turned out to be among the best founders in the world

Scope: explicit acknowledgement of the miss as the price of the approach

32:36 20VC: NEW FORMAT: Mega Funds Will Come Back, Why Markups Have Corrupted VC, Why RIFs Should Always Be An Embarrassment To SaaS Founders and Why Pitching is BS and Fake with Jason Lemkin and Rick Zullo

Jason Lemkin · Aug 23, 2023

If you want to catch the founders with terrible pitches and no traction, you have to run a genuinely high-volume meeting strategy — on the order of a thousand companies a year

Cutting founders slack costs real energy, unlike judging by email, so the only way the strategy works is volume

36:47 Only high volume meeting strategies catch founders with weak pitches but real potential

Jason Lemkin · Nov 30, 2022

The ideal inbound email is extremely detailed — MRR, growth rate, retention, marquee customers, team, why they win — enough that he wants to invest before the meeting

All of his initial unicorns were companies he already wanted to invest in before meeting them

5:37 A highly detailed quantified inbound email is itself a strong positive founder quality signal

Reid Hoffman · Jun 10, 2024

Fundraising is a required skill for founders, though fundraising ability alone doesn't make a good founder — some strong fundraisers are quasi-fraudulent.

27:59 Fundraising skill is necessary but does not guarantee founder quality some are fraudulent