Why Does Your Company Deserve More Money?

Seibel says it is harder to justify another $1–2 million when a company has not found product-market fit after spending its first $1–2 million. A team, product, or impressive office are means to an end; investors need evidence that the company is solving a problem.

When a company is not ready to raise, Seibel says cutting costs and aiming for break-even is often the better path. Revenue can give founders time to keep figuring things out without relying on investors to provide it.

Reflecting on Justin.tv, Seibel describes pitching a business where half the usage involved copyrighted content. Reaching break-even later gave him clarity: the company could focus on earning from users instead of shaping its strategy around investor expectations.

Seibel says founders should use early funding sensibly to build a product people love and show sustained growth before seeking a Series A. At YC’s Series A program kickoff, founders shared revenue alongside their ideas, with examples of $5 million and $3.5 million in revenue.

YC can help companies present their progress and run a fundraising process that makes the most of their leverage, Seibel says. Founders first have to do the work of figuring out what drives usage; a working business can often be shown with graphs and numbers.