Founders - stop expecting fundraising from VCs to be "fair".
It just isn't.
Talking pre-seed here. There are founders will real customers, product, and traction that will get lower valuation caps in their pre-seed round than founders with just a napkin sketch.
Look at the data below. It covers hundreds of startups who raised just about $1M on SAFEs last year.
Some of them raised on $5M valuation caps, some on $30M.
Unfair!
𝗪𝗵𝗮𝘁'𝘀 𝗛𝗮𝗽𝗽𝗲𝗻𝗶𝗻𝗴
Pre-seed valuation caps (since almost all pre-seed is happening on SAFEs now) are generally not reflections of the actual underlying value of the business.
They are instead reflections of the excitement specific investors have about the founders.
Founders in high demand, like those spinning out of AI research labs, can raise lots of money on high valuation caps with no real product.
Founders in low demand must show a lot more "real metrics" like revenue, live product, customer waitlists, etc etc in order to raise any money at all.
This same dynamic applies across many aspects of the founder (their network, prior work experience, prior founding experience, technical capability, on and on).
So no one can tell you how much ARR you need to raise $1M — because the number is not some idealized threshold over which the cash begins to flow. It's contextual to you and your business and the VCs idea of competition.
and yea, it's unfair.
If that unfairness rankles you, build without the VCs!
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