Is it true that unless you are one of the top VC, you don’t have access to the pipeline of best new startups?

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JASON LEMKIN

Sort of.

Once a startup has “options”, i.e. it’s hot enough that multiple top VCs would want to fund them … it’s very hard for a non-top VC to compete. Even if they pay more, it’s hard unless they pay a lot more. Like 2x more. And even competing on price is hard. Because many of the top VCs now have even huger funds, which mean they can write some of the largest checks.

But, as soon as you move away from the Hot and Obvious start-ups, competition falls off a cliff:

  • There are so, so many new startups created each year.
  • There are so, so many great startups that didn’t go through YC.
  • There are quite a few great startups that get to an inflection point (say $1m ARR, growing nicely) but aren’t Hot Yet.
  • Geographies outside the SF Bay Area are much less competitive.
  • There are quite a few startups with imperfect management teams that many VCs will pass on because the team doesn’t fit pattern matching.

So … yeah … unless you have one of the Top Brands in VC for a Given Stage, it’s really hard to “win” a competitive deal. And yeah, for non-Top Brands, your qualified pipeline may be relatively weak compared to the top guys.

But it’s OK. You just have to go a hunting, that’s all.

If you don’t aggressively hunt though … then … it’s hard. Really hard.

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Published on May 23, 2016
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