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Comment by nostrademons | Hacker News Reader

Usually the answer to that is to get a competing term sheet. That way, the answer to "Are you really going to quibble over 1%?" is "No, I'm not, I'm going to go with the firm that gives me that 1% without quibbling."

This also underscores the importance of doing fundraising in parallel and lining up as many offers as you can in a short period of time. If you're negotiating 1:1 you've already lost; you can't actually get market price unless you can make a market.

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This might work to maximize price but it won't necessarily land you with the best partners. The smartest, best money knows it and they make you pay for their investment. Moreover, approaching fundraising as a transactional auction in a quick sprint carries with it a bunch of "relationship debt." You're signing on to someone (your investor) you can't fire for the duration of your company's existence. Rushing into that might end up costing your company far more than the marginal gain from a bidding war. Just my two cents.

This goes against point #2 that the investor for the most part doesn't matter.

Point #2 is so patently absurd its hard to take seriously. One, YC are themselves investors, and as far as I know they don't position themselves as causally inert in relation to a company's success / one of many indistinguishable and arbitrary alternatives.

Two, I don't think you will find many entrepreneurs who'd claim indifference around their investor choice. At the very least, this claim asks us to believe there aren't terrible investors who cause damage, which runs contrary to both common sense and history.

[edited]

Well, mea culpa. The piece does address the issue of bad investors. My main beef is with the line, "in the end, while some investors are better than others, none of them translate directly to success," which I don't think is a credible claim, or at least warrants more evidence.

> This also underscores the importance of doing fundraising in parallel and lining up as many offers as you can in a short period of time

Most early-stage raises lack the luxury of a competitive process. Bring able to trade concessions in terms for the win of a deal is a strong predictor for greater commercial sense. If someone can’t give away another point to fund their business, they may be in the wrong seat.

Globally or in Silicon Valley (and other tech hotspots)? It's common knowledge among experienced founders (or even just people who read a bunch of startup blogs) in Silicon Valley - that's why people raise "a round" of fundraising instead of just going to a single VC.

In areas that aren't startup hotspots I can certainly see that dynamic, but this is why people move to the Bay Area for fundraising.

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