Aaron Harris, a former partner at YC, shares insights from his impressive career funding top companies like Deel and OpenSea. He emphasizes that investors prioritize compelling stories over data alone, and that a focus on long-term value is crucial for successful fundraising. Harris discusses the rapid movement in AI investment, noting that hot deals can secure term sheets in just 48 hours. He also highlights the importance of managing dilution during funding rounds and using hype strategically while remaining grounded in genuine business growth.
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insights INSIGHT
Hype as a Tool
Hype is a tool for fundraising, not a guarantee of business success.
It can boost sectors but doesn't ensure lasting value.
question_answer ANECDOTE
Crypto Hype Cycle
Many crypto companies raised significant funds during a hype cycle but ultimately failed.
This demonstrates hype's inability to guarantee success.
insights INSIGHT
Hype Cycle Mechanics
Hype cycles begin with a catalytic event, like ChatGPT's release for AI.
This triggers a flywheel of startups raising funds, attracting VCs, and encouraging more startups.
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Aaron Harris was a partner at YC for 7.5 years where he funded Deel, OpenSea, Scale AI, Rappi, Lattice, and others. He also built YC's Series A program where he worked with founders on over 200 Series As and Bs that raised in excess of $3B in capital. He joined Sam Kirschner, VP at Village Global, to give Village Global founders helpful tips on fundraising.
Takeaways:
Investors bet on stories, not just data. Your job? Tell a story of massive economic opportunity — not just how you fit into the future, but how you create it.
Hype lowers the barrier to turn attention into excitement.
Fundraising isn't the trophy, even though it's celebrated as such. But if you optimize for raising money, you get great at burning money and miss the real point: building something that lasts through the hype cycles.
Think about raising money with terminal value in mind, not just the value of this current round.
Raising an A: you'll need to raise about 20% of your company. Series B: 15-20%. Seeds are all over the place. More competition in a round means less dilution; less competition means more dilution. Hype helps reduce dilution.
Be aware of dilution on SAFEs so that you don't all of a sudden start arguing about a point of dilution here or there on a given round.
AI companies have been getting faster investor movement. The hottest deals land term sheets in 48 hours. Next tier? 1-2 weeks. Beyond that, a 2-6 week grind with unpredictable timing. After 6 weeks, rounds can stretch to 3-4 months where persistence is what leads to success.
Understand the market and how investors think by having casual, no-pitch-deck coffee chats. The real signal? Not a follow-up meeting — that's just a VC's job. Look for action: are they willing to spend political capital for you? That’s true interest.
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