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Debunking Myths About Early Stage Funding

Backing Early Stage Founders Who Don’t Fit a Mold‍
Published
July 11, 2023
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min read

There are a lot of assumptions about early stage fundraising, including that you have to be a certain type of founder, build in a specific market, or need to have it all figured out. At GC, none of those assumptions stick—especially when it comes to early stage investments. We love to connect with people who don’t fit the mold, as early as possible. 

GC is always looking for passionate founders who are solving problems personal to them and obsessed with finding solutions because they understand the pain points of their core customer like no other. We also love funding founders who are solving problems they believe shouldn’t exist in this day and age, who want to transform traditional industries, be category leaders, and who believe that they can change sectors, systems, and the world. 

To get the partnership you need to make that kind of change, you and your ideas should be out of the box. At the pre-seed and seed stage GC has funded category-defining companies such as Stripe, Discord, Remote, Anduril, ClassDojo, Hive AI, and Osmind. At Series A, some of the companies we’ve invested in include: Gusto, HubSpot, BigCommerce, Sleeper, Circle, Lemonade, and Ilumio

So let’s debunk common assumptions and walk through what helps GC gain conviction to back early stage founders. 

Breaking assumptions: You don’t have to fit a mold

The most common misconceptions we want to break are that 1) you have to be a certain "type” of person, 2) you have to have a certain “type” of idea, and 3) you have to be at a certain stage. 

Misconception #1: You have to be a certain “type” of person.

If you feel like a misfit or misunderstood, like your ideas are unrealistic or you don’t belong, you need an investment partner who can dream as big as you. One who doesn’t use the word “unrealistic,” and who understands that navigating unknown territory is a requirement of innovation.

Here’s what we don’t judge founders on:

  • Location. You don’t need to have grown up in Silicon Valley, in the US, or anywhere specific to be a great founder. Right now we are most active in the US, Europe, Israel, India, and Emerging Markets. We believe talent is universal, opportunity is not. We want to back founders who are going to build the next big global company regardless of where they were born and raised.
  • Exposure. You don’t need to know what entrepreneurship and venture capital are, or how, when, and where to fundraise. 
  • Network. You don’t need to have a tech network, Bay Area connections, or a degree from an Ivy league school (or any school). 
  • Experience. You don’t need experience working at a big tech company or venture-backed startup—or in investment banking, private equity, venture, or consulting. 
  • Background. You don’t need to come from privilege or money or have parents that went to Ivy league schools. 

We welcome unconventional outsiders, and our investment history proves our success investing in founders across borders, backgrounds, education pedigrees, levels of privilege, identities, genders, sexualities, and life experiences.

Misconception #2: You have to have a certain “type” of idea. 

Founders often think they need to build something "interesting," "sexy," "expected," in the hottest sectors or industries and designed for people in their age group to get funded early. At GC, this couldn’t be farther from the truth. 

GC is keen on backing founders that are interested in changing systems across sectors, industries, and the globe. We’ve invested in founders who have changed the face of healthcare, fintech, crypto, consumer, enterprise, resilience, and artificial intelligence sectors. 

So far, many of the founders we’ve backed have transformed the world by innovating intentionally, advancing inclusive prosperity, respecting people and their privacy, operating with accountability and transparency, building sustainably, championing diversity, and promoting a healthy society. 

Misconception #3: You have to be at a certain stage

No pitch is too early for GC to hear. We love meeting founders as early as possible and supporting them throughout the company’s life cycle. At the early stage we fund and support founders at the pre-seed, seed, and Series A stages.  We want to learn about your audacious ideas—whether they are unformed, formed, or fully-formed. We want to understand why you are building in a specific space, what your unique insights are, and what your actionable plan is. 

Founder qualities that get us excited—especially at the seed stage

GC wants to meet infinitely passionate founders that make us question everything we know and get us out of our comfort zone to dream about a future they will create. These are some of the qualities that inspire us: 

  • Incredible storytellers. Founders who are authentic and captivating storytellers who will convince the right individuals to join and support their vision (talent, capital, press, customers, etc.). 
  • Determined to build. Founders who are going to build their companies no matter what: with or without a VC, with or without GC, and with or without traditional investment. The best kind of founder meeting is when we walk out and can’t get them out of our heads the next day. 
  • Dreams without limits. Founders who never place limits on themselves and their goals and dreams—whose energy makes everyone in the room dream with them.
  • Tenaciously stubborn. We love hearing about how founders beat all odds and found doors to enter. It is refreshing to see founders constantly break locks and barriers to enter the room and make space for themselves at the table.
  • Curious. We look for founders that have the curiosity bug—who always want to learn, ask the right questions, and build on what they know. 
  • Have unique insights. When we sit in a founder meeting, we hope to learn more about their sector, industry, market, and customers because of the insights they’ve built over time. Founders are on the ground getting first hand research and we are impressed when they tell us what we don't know.
  • Want to change systems. Founders who are passionate and obsessed with how they are going to change the world, break traditional, antiquated, old ways of doing things, and create efficient systems, platforms, experiences, and products that can help save time, increase productivity, and help improve quality of living.
  • Obsessed with the customer. Founders who see something that is not working well and building something that solves customer pain points. Something customers want and need. Building a seamless and frictionless experience based on customer feedback. 
  • Solving personal problems. Founders solving problems that shouldn’t exist in this day and age that they’ve experienced in their own lives.
  • Understand their “why.” GC wants to back the next generation of courageous founders who have strong conviction on the “why” they are building companies. Whether it’s frustration with the problem, passion for the space, or anything else that you strongly believe in.

Three early-stage founder stories that didn’t fit the mold

Below are a few examples of founders we backed at the earliest stages. Each struck us with a sense of personal determination to solve a problem they understood first-hand and a strong vision for a better future. 

Jason Citron, founder of Discord

Jason Citron is a prime example of a founder who is truly obsessed with the customer as he is building a product for himself that solves a problem he experienced first-hand. GC backed his company Discord—a platform that allows users to communicate via text, video calls, and voice chat—at the seed stage. 

Jason was so excited about and convinced of the value of what he was building that GC funded him as a solo founder. When GC funded Jason in 2012, Discord was called Phoenix Guild, there was no one else on the team, and there was no product market fit or prototype. Jason wanted to initially build mid-core games for the ipad. Three years later, Discord found product market fit. It started as a place for gamers to chat, and now it’s a tool used by communities far beyond gaming.

Sam Choudary and Liam Don, founders of ClassDojo

Sam Choudary and Liam Don are founders who are determined to build, dream without limits, and are tenaciously stubborn. They moved to the Bay Area, without knowing anyone in the US, to create change in the education space. 

GC backed ClassDojo—a platform whose mission is to give every child on Earth an education they love—back in 2013. The founders convinced GC that to make their mission a reality, the education industry needed a shakedown and to serve those on the forefront—kids, teachers, and families—to create enduring impact. Today, they have built the largest network that connects teachers, children, and families around the world.

Lucia Huang and Jimmy Qian, founders of Osmind 

Lucia Huang and Jimmy Qian are incredible storytellers and first-time founders disrupting the traditional healthcare space. They weren’t happy with the way the mental health space was functioning and started building a solution. 

Mental health professionals were stuck using old IT software—some still using pen and paper—and Lucia and Jimmy began creating a treatment platform that aims to solve specific challenges faced by neuropsychiatric clinics, spanning general psychiatry and interventional psychiatry. GC funded them at the seed stage in 2020 because the founders convinced us that they would create software to help clinicians optimize mental health treatment for patients. Osmind’s modern EHR helps clinicians efficiently manage medications and administer interventions like TMS, ketamine, SPRAVATO®, and psychedelic medicine. 

We want to meet you

It is an incredible honor for our team to be in a room with a founder and limitlessly dream with them. If you are an outsider looking in, we want to meet you. It doesn’t matter what industry you are building in. It is completely okay if what you are building is boring, not “sexy,” unexpected, or not designed for folks your age. If you can see and are working towards a future that no one else seems to understand, reach out at tkhemani@generalcatalyst.com

Published
July 11, 2023
Share
#
min read

There are a lot of assumptions about early stage fundraising, including that you have to be a certain type of founder, build in a specific market, or need to have it all figured out. At GC, none of those assumptions stick—especially when it comes to early stage investments. We love to connect with people who don’t fit the mold, as early as possible. 

GC is always looking for passionate founders who are solving problems personal to them and obsessed with finding solutions because they understand the pain points of their core customer like no other. We also love funding founders who are solving problems they believe shouldn’t exist in this day and age, who want to transform traditional industries, be category leaders, and who believe that they can change sectors, systems, and the world. 

To get the partnership you need to make that kind of change, you and your ideas should be out of the box. At the pre-seed and seed stage GC has funded category-defining companies such as Stripe, Discord, Remote, Anduril, ClassDojo, Hive AI, and Osmind. At Series A, some of the companies we’ve invested in include: Gusto, HubSpot, BigCommerce, Sleeper, Circle, Lemonade, and Ilumio

So let’s debunk common assumptions and walk through what helps GC gain conviction to back early stage founders. 

Breaking assumptions: You don’t have to fit a mold

The most common misconceptions we want to break are that 1) you have to be a certain "type” of person, 2) you have to have a certain “type” of idea, and 3) you have to be at a certain stage. 

Misconception #1: You have to be a certain “type” of person.

If you feel like a misfit or misunderstood, like your ideas are unrealistic or you don’t belong, you need an investment partner who can dream as big as you. One who doesn’t use the word “unrealistic,” and who understands that navigating unknown territory is a requirement of innovation.

Here’s what we don’t judge founders on:

  • Location. You don’t need to have grown up in Silicon Valley, in the US, or anywhere specific to be a great founder. Right now we are most active in the US, Europe, Israel, India, and Emerging Markets. We believe talent is universal, opportunity is not. We want to back founders who are going to build the next big global company regardless of where they were born and raised.
  • Exposure. You don’t need to know what entrepreneurship and venture capital are, or how, when, and where to fundraise. 
  • Network. You don’t need to have a tech network, Bay Area connections, or a degree from an Ivy league school (or any school). 
  • Experience. You don’t need experience working at a big tech company or venture-backed startup—or in investment banking, private equity, venture, or consulting. 
  • Background. You don’t need to come from privilege or money or have parents that went to Ivy league schools. 

We welcome unconventional outsiders, and our investment history proves our success investing in founders across borders, backgrounds, education pedigrees, levels of privilege, identities, genders, sexualities, and life experiences.

Misconception #2: You have to have a certain “type” of idea. 

Founders often think they need to build something "interesting," "sexy," "expected," in the hottest sectors or industries and designed for people in their age group to get funded early. At GC, this couldn’t be farther from the truth. 

GC is keen on backing founders that are interested in changing systems across sectors, industries, and the globe. We’ve invested in founders who have changed the face of healthcare, fintech, crypto, consumer, enterprise, resilience, and artificial intelligence sectors. 

So far, many of the founders we’ve backed have transformed the world by innovating intentionally, advancing inclusive prosperity, respecting people and their privacy, operating with accountability and transparency, building sustainably, championing diversity, and promoting a healthy society. 

Misconception #3: You have to be at a certain stage

No pitch is too early for GC to hear. We love meeting founders as early as possible and supporting them throughout the company’s life cycle. At the early stage we fund and support founders at the pre-seed, seed, and Series A stages.  We want to learn about your audacious ideas—whether they are unformed, formed, or fully-formed. We want to understand why you are building in a specific space, what your unique insights are, and what your actionable plan is. 

Founder qualities that get us excited—especially at the seed stage

GC wants to meet infinitely passionate founders that make us question everything we know and get us out of our comfort zone to dream about a future they will create. These are some of the qualities that inspire us: 

  • Incredible storytellers. Founders who are authentic and captivating storytellers who will convince the right individuals to join and support their vision (talent, capital, press, customers, etc.). 
  • Determined to build. Founders who are going to build their companies no matter what: with or without a VC, with or without GC, and with or without traditional investment. The best kind of founder meeting is when we walk out and can’t get them out of our heads the next day. 
  • Dreams without limits. Founders who never place limits on themselves and their goals and dreams—whose energy makes everyone in the room dream with them.
  • Tenaciously stubborn. We love hearing about how founders beat all odds and found doors to enter. It is refreshing to see founders constantly break locks and barriers to enter the room and make space for themselves at the table.
  • Curious. We look for founders that have the curiosity bug—who always want to learn, ask the right questions, and build on what they know. 
  • Have unique insights. When we sit in a founder meeting, we hope to learn more about their sector, industry, market, and customers because of the insights they’ve built over time. Founders are on the ground getting first hand research and we are impressed when they tell us what we don't know.
  • Want to change systems. Founders who are passionate and obsessed with how they are going to change the world, break traditional, antiquated, old ways of doing things, and create efficient systems, platforms, experiences, and products that can help save time, increase productivity, and help improve quality of living.
  • Obsessed with the customer. Founders who see something that is not working well and building something that solves customer pain points. Something customers want and need. Building a seamless and frictionless experience based on customer feedback. 
  • Solving personal problems. Founders solving problems that shouldn’t exist in this day and age that they’ve experienced in their own lives.
  • Understand their “why.” GC wants to back the next generation of courageous founders who have strong conviction on the “why” they are building companies. Whether it’s frustration with the problem, passion for the space, or anything else that you strongly believe in.

Three early-stage founder stories that didn’t fit the mold

Below are a few examples of founders we backed at the earliest stages. Each struck us with a sense of personal determination to solve a problem they understood first-hand and a strong vision for a better future. 

Jason Citron, founder of Discord

Jason Citron is a prime example of a founder who is truly obsessed with the customer as he is building a product for himself that solves a problem he experienced first-hand. GC backed his company Discord—a platform that allows users to communicate via text, video calls, and voice chat—at the seed stage. 

Jason was so excited about and convinced of the value of what he was building that GC funded him as a solo founder. When GC funded Jason in 2012, Discord was called Phoenix Guild, there was no one else on the team, and there was no product market fit or prototype. Jason wanted to initially build mid-core games for the ipad. Three years later, Discord found product market fit. It started as a place for gamers to chat, and now it’s a tool used by communities far beyond gaming.

Sam Choudary and Liam Don, founders of ClassDojo

Sam Choudary and Liam Don are founders who are determined to build, dream without limits, and are tenaciously stubborn. They moved to the Bay Area, without knowing anyone in the US, to create change in the education space. 

GC backed ClassDojo—a platform whose mission is to give every child on Earth an education they love—back in 2013. The founders convinced GC that to make their mission a reality, the education industry needed a shakedown and to serve those on the forefront—kids, teachers, and families—to create enduring impact. Today, they have built the largest network that connects teachers, children, and families around the world.

Lucia Huang and Jimmy Qian, founders of Osmind 

Lucia Huang and Jimmy Qian are incredible storytellers and first-time founders disrupting the traditional healthcare space. They weren’t happy with the way the mental health space was functioning and started building a solution. 

Mental health professionals were stuck using old IT software—some still using pen and paper—and Lucia and Jimmy began creating a treatment platform that aims to solve specific challenges faced by neuropsychiatric clinics, spanning general psychiatry and interventional psychiatry. GC funded them at the seed stage in 2020 because the founders convinced us that they would create software to help clinicians optimize mental health treatment for patients. Osmind’s modern EHR helps clinicians efficiently manage medications and administer interventions like TMS, ketamine, SPRAVATO®, and psychedelic medicine. 

We want to meet you

It is an incredible honor for our team to be in a room with a founder and limitlessly dream with them. If you are an outsider looking in, we want to meet you. It doesn’t matter what industry you are building in. It is completely okay if what you are building is boring, not “sexy,” unexpected, or not designed for folks your age. If you can see and are working towards a future that no one else seems to understand, reach out at tkhemani@generalcatalyst.com