New Carta data shows that 30% of seed-stage startups used to raise a Series A within 2 years of their seed. Now, only 15% do. The bar for Series As is as high as it's ever been. And the number of seed extensions that I see is going up as a result.

But for founders, this is NOT a bad thing. I remember as a seed-stage founder I was obsessed with raising a Series A. But now I've seen startup after startup that raised $8-12M Series A when they didn't truly have product-market fit. Most of those startups ended up hiring too many people, burning too much money, and not growing any faster. They are now money-losing startups with no growth.

The VCs aren't happy, but they're okay. But the founders aren't. They are at the bottom of the stack. They can't sell their business and can't grow it either. They're stuck between a rock and a hard place.

The solution? If you're not performing at top quartile levels, if you don't have clear undeniable product-market fit, then raise a smaller round.

Seed extensions might not be what you wanted—but in many cases, it's what you need.

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Liran quit a cozy job at IBM to launch Fusic, a TikTok-like app back in 2011. He raised over $10M, acquired tens of thousands of users, and failed.

So he went back to what he knew: deep tech and enterprise. He launched WEKA in 2014 to improve the efficiency of GPUs. He was operating on hard mode: building deep tech and selling to large enterprise customers. It took him 5 years to build a commercially-ready product. In that time, he raised over $35M from strategic investors, since VCs didn't get it.

Once they launched, they more than doubled every year. And this year, they crossed $100M in ARR.

Here's how Liran built WEKA and got it off the ground.

Why you should listen:

• Why deep tech is much harder than normal software startups and always takes much longer.
• How to get enterprise customers to commit well before your product is ready.
• How to leverage strategic investors to get you through the early days when you have no revenue.
• How Liran was able to get customers to pay 6-figure deals when competitors offered 'similar' products for free.

Keywords
Weka, deep tech, large enterprises, GPUs, OS, product-market fit, funding, strategic investors, POCs, POVs, AI, GPU use case, performance, cost reduction, rapid growth


Timestamps:
(00:00:00) Intro
(00:02:12) Why my first startup failed
(00:08:35) Starting WEKA
(00:15:04) WEKA's First Customer
(00:17:43) The Operating System of CPUs
(00:21:19) The Issues with Deep Tech Companies
(00:26:19) Competing with a Free Product
(00:32:57) Reaching a Couple Million in ARR
(00:36:26) Fundraising
(00:43:19) Finding Product Market Fit
(00:44:08) One Piece of Advice

Send me a message to let me know what you think!

This episode is going to piss you off. Most founders struggle to raise their first few million. Many have to bootstrap for years. Even once there's revenue, many get rejected because they're "too early".

Dan had dozens of VCs asking to invest before he even quit his job. He raised his first $5M with no deck, no story, and no product idea. All it took was two founders who wanted to build something in the security space. To add fuel to the fire, 6 months after he incorporated, he raised a $50M round from Sequoia... with no revenue!

He didn't pitch dozens of VCs. He didn't create a deck. He just spoke to a partner at Sequoia and had a term sheet in 3 days. The reasons are part macro, part team, part market... and part just the insanity that sometimes happens in Startup Land.

It's hard to beleive and makes little sense from the outside. But it often works. Chainguard just closed $140M Series C, has 100s of customers and does 8 figures in ARR.

Here's how it happened.

Why you should listen:

• Why launching multiple products at once worked for Dan.
• How to raise from a position of strength to get favourable terms.
• Why identifying the right markets can be such an important step.
• Why time to value and leads to fast growth and high close rates.

Keywords
startup, fundraising, product market fit, Sequoia, security, open source, venture capital, entrepreneurship, growth strategies, technology, innovation

Send me a message to let me know what you think!