#140 - Aaron Harris on Fundraising and Meeting with Investors

**Craig Cannon** (0:00)
Hey, how's it going? This is Craig Cannon, and you're listening to Y Combinator's podcast. Today's episode is about fundraising, and it's with Aaron Harris. Aaron is a partner at YC, and before that, he co-founded Tutorspree. He's on Twitter, at Harris. All right, here we go.
Aaron Harris, welcome to the podcast.

**Aaron Harris** (0:19)
Thanks, Craig, good to be here.

**Craig Cannon** (0:20)
So we are a couple days away from demo day, and I figure there's no one better than you to talk about fundraising advice with.
So I want to start with some seed fundraising advice in the context of, we can just say broadly, like YC or another accelerator, like a company in that situation. How do you think about it, and how would you advise a founder to figure out a process to do a seed round?

**Aaron Harris** (0:50)
Yeah, so I actually think this is broadly applicable to anyone thinking about raising.
The core idea behind Demo Day, the reason it's so helpful for founders, is two things. One, it gives them essentially an artificial forcing function. It's just saying, hey, there's this day and time when I'm gonna go raise money.
And it makes you focus everything on that.
The mistake that a lot of founders make is that they are constantly fundraising while building product, and trying to do both things at the same time. And what we did with Demo Day was say, no, no, no, no. You do one thing at a time, right? You basically take your product work and you make that X number of months until it's good enough, until you have customers.
And then at some point, when it's good enough, you switch over to fundraising, because fundraising takes all of your time and energy and effort. And to do it well, you really need to work on it. And you can't work on your company and your product and your customers at the same time. So Demo Day forces companies, the knowledge that's there, it forces companies to say, or founders to say, hey, I'm doing this now, and then I'm gonna fundraise. Now, the reason a lot of people feel sick to their stomachs to do that is because they think, oh, well, I'm never gonna meet the investors. I have to spend all my time hustling to meet investors. And this is actually another misconception. When you go out and you try to meet investors and you got nothing, they don't wanna talk to you. Which is obvious, right? They have other things to do. And even though it's their job to meet with companies, it's not an angel's job to meet with companies. They do it on the side.
And so when you go and say, hey, I have this idea, well, there's a lot of ideas. What they wanna see is some evidence that you're going to do the things you say you're gonna do. And so when we have demo day, we have this thing where it says, oh, well, we're gonna have 3,000 investors listening to your pitch at the same time. And sort of, oh, of course, I don't have to talk to investors before that. I'm gonna talk to all the investors. But any founder working on a company can kind of do the same thing, because if you spend, let's say you're not doing YC, and you say, well, I wanna replicate that experience. I'm gonna spend 3 months, and all I'm gonna do is work on product, talk to customers, make things people want, then write more product, talk to more customers, write more product, da-da-da-da-da, right? Iterate on that.

**Craig Cannon** (3:04)
At the end of that 3 months.

**Aaron Harris** (3:05)
At the end of that 3 months, I'm gonna go to investors and say, hey, look, I have a fully built product. I have a bunch of customers. It's growing. The investors will be very excited to meet with you, even if you're cold emailing them.
When I get cold emails from people who are clearly doing both things at the same time, my advice is almost universally, hey, you need to focus more on your actual customers, because you don't have anything yet.

**Craig Cannon** (3:28)
To step aside for a second, let's actually talk about that email, emailing an investor. Let's say you did it by the books. You're not a bullshit artist. You actually spent 3 months building something. You have some customers.
How do you think about emailing a seed stage investor?

**Aaron Harris** (3:47)
So, there's a trick in this, in that your email needs to be both short and informative.

**Craig Cannon** (3:54)
Right.

**Aaron Harris** (3:55)
And a lot of the way that people write emails, they'll write long emails that are informative, or short emails that are totally irrelevant.