digest
Short Summary
Main recommendation: If you struggled to raise money in your local startup community, don't assume your idea is bad or that you should quit; consider raising in the Bay Area or another large, active startup hub instead. Michael Seibel explains that Bay Area investors, having passed on many companies that later succeeded, tend to give ideas more benefit of the doubt, while investors in weaker markets often say no and are usually right because they see fewer good deals.
Key Points
- Investor behavior depends on location: Bay Area early-stage investors who have repeatedly said no to later winners approach each new company with more caution and curiosity, which makes them more open to ideas.
- Investors outside strong startup communities see fewer deals and fewer good ones, so their repeated "no" answers have usually been correct, leading them to dismiss ideas more quickly.
- Active startup communities tend to ask how a founder will execute, monetize, and scale, rather than whether the idea is good at all.
- Seibel says he judges companies more by whether the team is executing than by the quality of the idea, because his ability to predict which ideas will succeed is weaker than his ability to assess execution.
Details Worth Noting
- Concrete instructions: If local investors keep rejecting you, don't overcorrect by changing your idea just because of their feedback; instead, consider pitching in the Bay Area or a larger startup community. When talking to investors, be ready to explain how you will execute, how you will monetize, and how big the idea can become, since that is what Bay Area investors dig into. Focus on demonstrating that your team is executing, because Seibel values that signal more than the idea itself.
- The example involves a YC company founder who grew up in North Carolina and struggled to raise money locally, then asked Seibel how to raise money in Silicon Valley.
- Seibel's comments are based on his review of hundreds of thousands of YC applications, which he cites as the basis for preferring the "is this team executing" standard.
- The advice does not claim that every idea is good or that local investors are wrong to be cautious; it argues the difference is driven by deal flow and investor experience.
Bottom Line
A failed local fundraise is more likely a reflection of where you pitched than of the quality of your idea, so test your startup in a deeper investor market while showing clear execution.
