Max Elster

founders: this is a good summary of why VCs reject you, though keep in mind that stellaris isn't an early stage fund. that is, it's just fine if you haven't figured out everything in the early days. but by the time you are raising series A, you need to have clarity on many fronts- Just don't wait for everything to fall in place before you startup.

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I turned down £10M in funding. Everyone called me crazy (perhaps I was) But I'd seen founders lose their companies to investors who: 👉 Changed the vision 👉 Forced quick exits 👉 Pushed growth over sustainability (Also, they wanted me to ditch my existing seed investors- I felt a responsibility and still do to the people who had faith in me and my vision) At The Brew , we chose bootstrapping. Yes, it meant: 👉 Slower growth 👉 Tighter budgets 👉 More stress But also: ✅ Full control ✅ Better decisions ✅ Sustainable growth Plot twist: We now help other founders avoid the same pressure by offering flexible office space without long-term commitments. 🚀 Sometimes, saying no to money means saying yes to your vision. What would you choose: Fast money or full control? #StartupAdvice #FundingAdvice #EntrepreneurshipJourney

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Founders should be able to sell secondary whenever they’d like to do so. If you make something - and that thing is valuable - you should be able to sell it. Actually selling that secondary can be tricky. Let's go through the actual steps (or read the whole essay https://lnkd.in/eajr238N): 1. Get the term sheet. 2. Negotiate “normal” major terms: dollars in, price, board, etc. 3. Don’t forget about re-vesting. Founders often do. 4. Sign the term sheet. Go out and start figuring out allocations for the remaining dollars. 5. If you’re lucky enough to have more demand than you do space, you have the opportunity to sell some secondary. Figure out how much excess demand you have. 6. Talk to your lawyer and your accountant about what you want to do. Ask them to explain the pros and cons of selling secondary as common shares vs. preferred shares (which is a bit out of scope for this essay). 7. Decide how much secondary you want - ideally this is “reasonable,” which is a moving target. One good way to frame “reasonable” is to give a clear reason as to why you want to sell. This is particularly important in early rounds. Good reasons include: “Need to pay off student debt” and “Just had our first kid after years at below market salary.” Less good reasons include “Need a new Porsche” and “LinkedIn ghostwriter prices went up.” 8. Go to your new lead investor and say “Hey! Great news! We have 2x demand for available shares. It would mean quite a lot to me and my cofounder if we could take (insert reasonable amount here) off the table because (insert reasonable reason) here. Obviously as our lead, you get first access. Sound good?” 9. Work with the buyer to figure out if you are selling common shares or preferred shares. (a) If you are selling common shares, and the buyer is willing to buy these at the same price as preferred, great! Just make sure that you aren’t creating any challenges around voting by giving those shares to an outside party. Also, talk to your lawyer and accountant. (b) If you are selling preferred shares, go back to your lawyer and accountant to make sure you’re not creating any issues for yourself. You’ll also need to confirm with your existing investors that they are ok with you doing this because it will change the preference stack - which impacts them. 10. Triple check your numbers. 11. Complete your transaction and close the round.

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Next year for StartupNash, founders are doubling down on go-to-network strategy. My role is as always: support. But this year, StartupNash is adding something new: our first launch program for founders. How are we doing it? I got together with a few company partners (these meetings are ongoing and some are in the new year). I'd love to add a few more. Then I asked my community about marketing and go-to-market (over the year, this has consistently been one of the top things founders in Nashville say they need help with). Then I created the outline for a program to help: -Small group style -Quarterly check-ins -6 Happy Hours: Build relationships with peers, stakeholders, and talent (continued from 2024) -6 Hands-on sessions for: Identify, outreach, pipeline for customers, stakeholders, peers, talent, and expertise. -Actually creating marketing assets for each audience. Outcomes: -A GTN strategy for the above groups -Materials for communicating to customers, investors, and talent. -Defined way for teams to measure what is working. * This could change but this is the gist. How you can help: I want to talk to large Nashville based tech companies to see what their innovation teams are doing in 2025. Are there any companies with a good relationship to the startup community? What does that look like and how do both groups benefit? Is there a company out there who wants to sponsor a founder to go through this type of program? Are there folks with access to community grants looking to partner with someone with a program like this? Tagging a few folks! Cameron Crain Phil Shmerling Maebellyne Ventura Monique Villa Capra Sam Davidson Yesenia Sevilla Brian Moyer Deanna Meador Cynthia Cohen Peter Swan #StartupNash #Networking #StartupGrowth #GoToMarket #gotonetwork

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Our strategy at PeakSpan is simple - scaling a growth company successfully should be an iterative, incremental process. The decisions and options you have in front of you at $3M of ARR scale are vastly different than those at $10M and different still from those at $25M and beyond - scale your way into success sensibly, putting your foot on the gas more and more when the data asserts that you’re ready for it and it’s the right thing to do. This video encapsulates our approach in a nutshell - swinging as hard as you can for a statistically unlikely outcome when you’re a young, still very much evolving business, simply isn’t the value maximizing strategy. https://lnkd.in/e96AzU_N

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A number of you have been there, investing your own hard-earned money or money under management from others. While once a company has reached a certain level of maturity, there are numbers to look at, which give part of the story, at early-stage, it's really down to assessing people. We all have gut instinct, which is good to use in particular when it does don't feel right, but it's also good to have some reference frameworks to use and practice on. Credit Chris and Ruben for this high-quality content.

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As a former product leader turned investor, I often get asked how to start investing in early-stage startups. Here are three key lessons I’ve learned: Invest for performance: Investing is about generating returns, not giving money away. Always prioritize performance when evaluating opportunities. Learn from experienced investors: Networking is crucial. Join angel groups, peer communities, or venture firms like Mighty Capital to connect with seasoned investors and learn from their expertise. Invest without an agenda: Stay focused on the core goal of investing—building a high-performing portfolio. I’d love to hear your thoughts or answer any questions! #startups #investing #venturecapital

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"It's just a stupid podcast bro..." Well, this distribution-first, product-second approach just got 20VC a $400M fund. Through consistent quality content, the 2015 Harry Stebbings went from: → having no network in tech or VC → having $50 to his name → being a law student To 2024 Harry: → raised three funds for 20VC — of $8.3M, $140M, and $400M → doing podcasts w/ icons like John Doerr, Keith Rabois, Bret Taylor, etc. → huge guests w/ all the hype, like Sam Altman, Gary Vee, & Cathie Wood. 3x episodes per week. Quality content. Provide free value. Do cool sh*t. That's all it takes (kinda). Harry attributes this success to 20VC's media empire too: "We’re a venture fund tied to a media business, and that tangible element really makes a difference in terms of us being attractive to invest in." a16z clearly sees the indisputable value in owning distribution too. That's simply how the dynamics in media are shifting: Borrowing distribution from big "mainstream" media corps are crumbling. Owning distribution (having an audience) is rising. Which means: distribution-first, product-second (as Greg Isenberg talks extensively about too)

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Every SAAS company is going after the same persona. Why? Whenever I ask about who is your customer I always get the same response. "oh, we are targeting small businesses in [geography]" 😕 Most early-stage founders are investing a fortune into these vague and guess-based personas. All that money is going into "guess marketing" not into "growth marketing" Not having enough data is not an excuse to go after vague personas. You can come up with a minimum viable persona and test this segment. Much better than the "we target small businesses" persona #seo, #saasmarketing, #gtmstrategy, #contentmarketing, #growthmarketing

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Trying to get from $0 to $1M ARR? Find your PMF. Obsess over identifying a problem that a big enough market urgently needs solving. Talk to your customers about their most painful problems and validate your assumptions. Not all feedback will be valuable. Focus on insights from your early adopters—they become your ICP and shape your product. Stay true to your core customer profile. Chasing revenue or artificially widening the PMF dilutes your product's effectiveness. Your product can only meet so many needs. Tailor every feature to your ICP. Your first version is your Minimum Sellable Product (MSP). Make the MSP easy to use and beneficial. With customers using your product, continually collect feedback to improve: 1 - Offering 2 - Marketing messages 3 - Sales calls 4 - Pricing structure 5 - Demo flow If you reach $1M ARR, congratulations! Your product has real demand. Next, it’s time to think about scaling to $10M ARR. More on that soon.

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FOUNDERS STOP DEMOING On net, early stage founders should stop demoing their products on the first sales call. I've watched dozens of Fathom videos of pre-seed and seed stage founders I've invested in, and its the number one culprit for wasting time and derailing your sales motions. Your product demo is SACRED and should only be shown to qualified buyers. In complex sales, the goal of your first sales call is NOT to sell, but determine whether you are talking to a qualified prospect: an influential champion at a company with a real usage case, that will actually buy your product in a reasonable amount of time. Demoing can incite an excitable stakeholder with no power, and organizations with no real need, to progress a deal. This false sense of progress creates an escalating sense of sunk cost that makes it hard for founders to abandon the deal. You end up spending a ton of time in follow up hell chasing a bad prospective design partner. In the early stages, all you have is time and resource costs. Don't squander it chasing bad customers. While its tempting to use slides or a product demo as a crutch, it completely derails your ability to run a productive "discovery" call. FOCUS on the conversation and if necessary prepare a list of 20 questions, sequenced by batches, that unlocks true understanding of the stakeholder's role / power, their organization buying process, and whether they may have a real usage case and urgency to make a purchasing decision in the next 2 quarters. If they don't, throw them in your nurturing campaign and move on. Your time is better spent focusing on setting more meetings.

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I am not necessarily the best founder. Maybe not even a good one. Perhaps I shouldn't even be a founder at all. No, this isn't a "Or that's what I thought..." hook. Just reality of the journey. One of the most brutally difficult (and fascinating) dilemmas I've faced is... why do I not just focus on one venture? Why the portfolio? Why do I do this? If I handled Lumi the way a 'typical' founder handles a startup, obsessing over growth and progress, we would have probably raised Pre-Seed like yesterday. I would have been on a strong upwards trajectory, building an awesome product, with a great team and lots of potential. I know I could have done it in time. So why did I start a SECOND company with 4 other roles to boot? See, there is a strange quirk to how I handle my projects. I am deep generalist, if you will. Operations, marketing, pitching, GTM – put me into that function full time and I VOW to you I will grow into an A-player within 3 months. When in the driver's seat myself, or as an advisor, I draw on every area to craft holistic strategies and work through challenges. It's my greatest advantage. I also don't think in the logic on a singular problem. I think, instead, systemically. What are things I wish to change? What am I best-positioned to change? What do I want to advance through my efforts? When I can, I take up a leadership role and lead a team to change that something. If there is no existing org, I create my own to fill the space. If I believe in a mission, and see a problem, I will formulate and execute on a solution however much my capacity conceivably permits. Venture-backed growth startups are one trajectory. My portfolio model is another. One is VASTLY better on growth. Mine surpasses it in synergy and sheer scale, if done well. "I probably shouldn't be a founder at all" – no, that isn't quite right. What I learned is, instead, I am incredibly good at macro. Shaping ecosystems. Advising many founders at once. Scaling multiple products & leveraging insights across disciplines and projects. Building Ventures, plural. Maybe my model isn't as effective. It's uncharted territory in many ways. I've never seen anyone operate as a portfolio "themselves", not explicitly. But I think there is something immensely valuable here – and something that I can build on going forward. What will that be? Who knows. I'll still start and scale companies anyway – I love the ascent, the discovery, the problem solving. It's part of my plan for the next 3 years. I would do it pretty much no matter what. But perhaps It's also time for me to look to new directions. Advisory, venture builders... it's all fascinating. Who knows what I will find.

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Summary of conversations at conferences about AI in commercial functions: Person a: what are you using AI for in your business? Person b: 🤷‍♂️ we tried to make a super cool predictive model but our data was too dirty. Also our revops team was understaffed. I did ask ChatGPT4 to make me a list of restaurants to visit at this conference. Person c: that’s weird, I asked it to make me a picture this morning Person a: 🙋‍♂️ still wondering….what are you using it for in your business again? I believe that AI will ultimately be really helpful to many different business functions. We’re in the very early innings, though.

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Founders underestimate how hard sales will be. They index heavily on getting the product "right." They ask for feedback from friends. They try and get design partners that will use the software for free. And they'll spend months, or maybe even over a year doing this. They'll often try to start a PLG motion, not realizing that they don't really exist. And they'll need a TON of marketing and awareness just to get a handful of leads. And they'll need HUNDREDs of signups to understand an onboarding flow. So then they go out to "sell" what they have. And nobody is buying. So they start blaming prospects that "don't get it." They start making excuses for why things aren't working. Instead of facing the hard reality... They built something that's cool, or nice to have. But folks aren't willing to pay money for. Because the problem they're trying to solve isn't a real problem. Or if it is, it's not a painkiller type of problem. You can figure this out pretty quickly when you're running a sales-led motion. You reach out to folks in your ICP explaining the problem in detail, and gauge responses. You run sales calls probing for pain and how it impacts the rest of the business. You demo using Context > Problem > Capabilities > Show > Ask framework to put your software in their world, to make sure it actually solves the problem they have. You follow-up diligently outlining the pains they've mentioned. You charge something - ANYTHING - to get paid users, and not free advice. You get feedback from your initial users, and decide to change your product. Make it better. Solve the problem better. Sell. Build. Sell. And you use this cycle to get your startup off the ground. Sales isn't just about closing deals in the early stages. It's also about understanding the market and the pain you're solving. Deeply. There's no way around it. You need to talk to folks who are willing to pay you money for the advice to be real. And you do this through running a sales process. So start upskilling on sales now. Even before your MVP is "ready." And get that product in front of real prospects as fast as possible. And get your first paid user as fast as possible. Waiting will crush you. Your cash burn will be too high. You'll run out of time.

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Should you raise a round or use an "open SAFE"? This question comes up often in discussions with pre-seed stage founders. The dilemma is this: Let's say that you want to raise a $1M pre-seed round. Should you go all out and try to raise it as a pre-seed round or should you just open a SAFE and "collect checks" over time? From one hand it would be great to raise the money in one shot and put it behind you. But, on the other hand it can take a lot of time and attention. My strong opinion is this: 1. Your objective should always be to spend the least amount of time on #fundraising. Any minute spent on fundraising is a minute not spent on building your product and market traction. 2. You should try to fundraise the necessary amount and move on as quickly as you can. Using an open SAFE, will put you in a nagging ongoing fundraising that will be a burden on you. It would be like dealing with a chronic pain. It's always there and nagging. 3. It's true that orchestrating a round takes lots of work and energy, while using an open SAFE feels more relaxed and more psychologically... safe. But that's going to be a false sense of safety and over time it will distract you. ** Therefore, an open SAFE should be the fallback to a pre-seed round. ** You should allocate a few weeks for a concentrated high velocity fundraising effort and try to orchestrate a full pre-seed round. If you see no progress and the feedback is that you're too "early", then you can fallback to an open SAFE.

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A recent conversation with a founder: His company developed a B2B SaaS product. They showed some initial promise but ultimately couldn’t achieve meaningful growth. They didn’t reach product/market fit. Then they kept developing more features. And some more features. All of a sudden, they had a product with 12 different main features, none of which was a killer differentiator. The product surface area was so large that the engineering team was always busy just maintaining the codebase. As founders, we all know this isn’t the best way to go. But avoiding this trap is easier said than done — it's just how human psychology works. We get backed into a corner, and our instinct is to work harder and do more things. Occasionally, in the history of products, there have been those that were stuck but finally achieved breakthrough growth with that one key feature. We feel we have to keep the team busy; we can’t have them idle. The list goes on. That’s why, when stuck, sometimes the team needs to slow down at least a little bit and use their brains more than their bodies (i.e., building more features). Startups don’t have abundant resources, so the only edge they can have is to do one thing (which will turn out to be the game changer) really well. It’s about finding that one game-changing thing, not doing more things.

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🚀 The Hidden Math of Pre-Seed Funding: Why $1.5M Is Your Magic Number I've been speaking with dozens of founders lately about their fundraising strategy. The same question keeps coming up: "How much should we raise at pre-seed vs seed?" After countless conversations and seeing real fundraising journeys play out, I thought I'd break down what I believe is the most efficient path. 💡 The Reality Check: • Seed stage investors expect $300-1M ARR • Average time to reach this: 12-18 months • Typical burn rate: $80-100K/month • Required runway: minimum 18 months Let's dive deep into two common paths and their EXACT Math Path A (The Optimal Route) 📈 1. Angel Round: • Raise: $300K @ $2.5M post-money • Initial dilution: 12% • Founders own: 88% 2. Pre-seed Round: • Raise: $1.5M @ $5M post-money • Additional dilution: 30% • Founders own: 61.6% (88% × 70%) 3. Seed Round: • Raise: $3M @ $10M post-money • Additional dilution: 30% • Final founder ownership: 43.12% (61.6% × 70%) Path B (The Risky Route) 📊 1. Initial Pre-seed: • Raise: $1M @ $5M post-money • Initial dilution: 20% • Founders own: 80% 2. Bridge Round: • Raise: $800K @ $8M post-money • Additional dilution: 10% • Founders own: 72% (80% × 90%) 3. Seed Round: • Raise: $3M @ $10M post-money • Additional dilution: 30% • Final founder ownership: 50.4% (72% × 70%) 🔍 Deeper Analysis: Why Path A is superior: 1. Cash Efficiency: • Earlier capital = faster experimentation • More runway for product iterations • Lower cost of capital over time 2. Investor Psychology: • Clean cap table • No bridge round stigma • Stronger negotiating position at seed 3. Operational Benefits: • Faster hiring timeline • Better vendor terms • More marketing experiments 💰 The Real Cost of Underfunding: Year 1 Essential Expenses: • Tech team (3-6 people): $400-500K • Product development: $150-200K • Sales & Marketing: $200-300K • Operations & Tools: $100-150K • Buffer for unexpected: $200-250K Total Needed: $1.05M-1.4M (minimum) 🎯 Strategic Considerations: Pre-seed success metrics: • MVP with initial users • Clear product-market fit signals • Early revenue ($10-20K MRR) • Validated customer acquisition channels • Core team assembled Seed stage requirements: • $25- 100K MRR • 15-20% MoM growth • Proven unit economics • Scalable acquisition channels • Full-time team of 8-12 ⚠️ Common Pitfalls: 1. Underestimating burn rate 2. Insufficient experimentation budget 3. No buffer for market changes 4. Weak investor syndicate 5. Premature scaling 🎤 The Bottom Line: $1.5M in pre-seed isn't just about the money - it's about buying enough time and resources to build something investors want to bet on at seed stage. Real talk: Would you rather own 43% of a company positioned for success, or 100% of one that runs out of runway? 💭 Question for founders: What's your biggest concern about raising a larger pre-seed round? What trade-offs are you considering? #StartupFunding #VentureCapital #StartupMetrics

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A big question I consistently get from early stage founders - is taking VC cash versus building bootstrapped. While I say out loud everytime that I’d choose latter or take way less capital intentionally if I were to do it again, I can’t deny the fact that being part of the VC ecosystem gave me a lot too. Being part of the VC ecosystem means: - you ‘might’ get lucky & get that 1 (or two if you’re luckier!) investor who becomes a mentor / friend for life - there is a constant dose of adrenaline-rushing inspiration as you build alongside incredible peers across diff industries - exposure to a lot more anecdotal learning re > building differentiated value-prop products, hacking distribution innovatively, knowing when is the right time to layer in HR and Legal and other systems in the growth story - meeting a lot of folks, as is evident in the high-pressure-game, that helps you build “a thick skin” much early on ;) It ain’t for everybody. It needn’t be for everybody. It can be very very harsh, super highs and super lows. But it’s fun too once you “get it” :-)

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"Mr. Money lives on focus island"* I regularly talk to B2B SaaS founders about the best revenue channel to start with. They usually have 3 dreams: A) The “product led growth” dream 🧑‍💻 Tons of small customers who come by themselves through the website. Problem: high churn, no expansion potential. B) The “someone else is selling for me “ dream 🤝 Finding sales partners who have access to the market and sell my solution. Problem: no commitment, complicated contracts, no direct access to customers. C) The “Big fish” dream 🐠 Closing big enterprise deals with a lot revenue potential. Problem: long sales cycle, many stake holders, high customization effort. Dreams are good, but revenue is better for a startup! ➡️ The best target group up to 1M ARR revenue are mid market companies! Here you have the best correlation between sales cycle, sales potential and product feedback. Focus and learn to sell to this customer group in the beginning. Start selling "up-market" later and do partner business opportunistically. Happy selling 🚀 *The saying is from my friend Johannis Hatt he's right and a great business angel on top. ____________________________ Sharing my experience as an entrepreneur and angel investor. Investing in early stage B2B SaaS startups. Happy to connect 👋

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