Why Fundraising Is Different In Silicon Valley

Seibel describes a YC company whose founders grew up in North Carolina and struggled to raise money in their local community. They worried that the same would happen in Silicon Valley and were overcorrecting based on feedback from local angel investors.

Seibel says Bay Area investors who have been active for a long time have likely turned down companies that later succeeded. Those misses can make them more cautious about dismissing new companies before investigating them. In other communities, investors may see fewer deals, so their past rejections are more likely to have seemed correct.

According to Seibel, investors in the Bay Area and other active startup communities are more likely to dig into a company’s execution, monetization, and potential scale. Elsewhere, he more often sees investors focus first on whether the idea itself is good. From reviewing hundreds of thousands of YC applications, he says he finds it easier to assess a team’s execution than an idea’s quality.

A difficult local fundraise does not necessarily mean the idea is bad or that the founders should quit. Seibel suggests trying the same raise in the Bay Area or another larger startup community, where investors may be less likely to reject a company without first examining its work.