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How to Start a Startup · Lecture 9 of 19 · 50:22

Lecture 9: How to Raise Money with Marc Andreessen, Ron Conway, and Parker Conrad

Study guide

What this lecture covers

This lecture is a panel discussion on fundraising, led by Sam Altman, with Marc Andreessen (Netscape, Andreessen Horowitz), Ron Conway (SV Angel), and Parker Conrad (founder of Zenefits). It sits in the course's run of guest lectures on the practical mechanics of running a startup, following talks on product, growth, and doing things that don't scale.

No transcript is available for this video, so this guide is built from its title, description, and the course context. Based on the panel's makeup, expect a Q&A-style discussion covering how and when to raise money, how investors evaluate early-stage founders, and how a founder like Conrad experienced fundraising from the other side of the table.

Key ideas

Fundraising as a Q&A panel: Sam Altman leads the discussion with two prominent investors and a founder, rather than a single structured lecture.
Investor perspective: Marc Andreessen and Ron Conway bring perspectives from venture capital and angel investing, likely covering what they look for when deciding to fund a company.
Founder perspective: Parker Conrad, as the founder of Zenefits, offers a contrasting view of what raising money is actually like from the company side.
Supplementary material: the lecture page links to Ron Conway's slides and further readings for anyone who wants a deeper treatment of the fundraising process.

Before you watch

Watching earlier lectures on product, growth, and getting started (Lectures 6 through 8 in this course) provides useful context, since fundraising typically follows early product-market fit signals.
Familiarity with basic startup terms like seed round, valuation, and term sheet will help you follow a panel discussion of this kind.

Check your understanding

What might differentiate the advice given by an investor like Marc Andreessen or Ron Conway from the perspective offered by a founder like Parker Conrad?
Why might a course on starting a startup place a fundraising panel after lectures on product and growth rather than before them?

Vocabulary

panel discussion (noun): A talk where several experts sit together and answer questions.
This lecture is a panel discussion on fundraising.
fundraising (noun): The process of getting money from investors for a company.
Fundraising is often harder than founders expect.
venture capital (noun): Money invested in new, risky companies with high growth potential.
Marc Andreessen invests venture capital in startups.
angel investing (noun): Individuals investing their own money in very early startups.
Ron Conway is known for angel investing in tech companies.
founder perspective (phrase): The point of view of the person who started the company.
Parker Conrad brings a founder perspective to the panel.
term sheet (noun): A document listing the main terms of an investment deal.
Founders should understand a term sheet before signing it.
valuation (noun): The estimated worth of a company in money.
Investors and founders often disagree on a startup's valuation.
seed round (noun): The very first round of money raised by a new company.
A seed round usually comes before larger funding rounds.
traction (noun): Early evidence that a product is gaining real users or sales.
Investors want to see traction before writing a big check.
outside capital (phrase): Money from investors, rather than from the founders themselves.
Some founders avoid outside capital until they must raise it.
slides (noun): A set of visual pages used to present information.
Ron Conway's slides go into more detail on fundraising.
supplementary material (noun): Extra content added to support or explain the main topic.
Supplementary material links to further readings on fundraising.
portfolio (noun): The full set of companies an investor has put money into.
A venture firm's portfolio includes many young startups.
due diligence (noun): A careful check of a company before investing in it.
Investors perform due diligence before writing a check.
equity stake (noun): A share of ownership in a company.
Investors receive an equity stake in exchange for funding.
pitch deck (noun): A short slide presentation founders use to explain their company to investors.
Founders present a pitch deck when raising money.
runway (noun): How long a company can operate before running out of cash.
Raising money extends a startup's runway.
dilution (noun): A reduction in ownership percentage caused by issuing new shares.
Each funding round causes some dilution for existing shareholders.
term (noun): A specific condition written into a legal or financial agreement.
Founders should read every term in an investment agreement.
negotiate (verb): To discuss terms with someone to reach an agreement.
Founders often negotiate valuation with investors.

From the YouTube description

How to Start a Startup is a series of video lectures, initially given at Stanford in Fall 2014.

Lecture Transcript: http://www.tech.genius.com/Marc-andreessen-lecture-9-how-to-raise-money-annotated

Sam leads a panel Q&A on Fundraising in this lecture with Marc Andreessen, Founder of Netscape and Andreessen Horowitz, Ron Conway, Founder of SV Angel, and Parker Conrad, Founder of Zenefits.

See Ron Conway's slide, and readings at http://www.startupclass.samaltman.com/courses/lec09

Discuss this lecture: http://www.startupclass.co/courses/how-to-start-a-startup/lectures/64038

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