Aaron Stachel

Key Quotes

"We needed to raise a bigger fund this time to be a meaningful participant in bigger rounds — seed founds are getting bigger — between $3 million and $5 million. That used to be the size of a Series A (venture capital) round just a few years ago… It can still be hard to find an investor to lead your earliest round. We're comfortable at that stage, and having a larger fund gives us the capacity to catalyze those rounds."

“Not the best analogy since Silicon Valley is such a unique place with no real equal, but Boulder is to Colorado's Front Range (collection of cities along the mountains between Fort Collins and Colorado Springs) as Silicon Valley is to the broader "Bay Area." Most of the activity is in the Denver-Boulder corridor, which are only 30 minutes apart. Boulder is in many ways the center of entrepreneurial activity in the state, but as another answer mentioned, it has certain space and cost of living constraints that make surrounding communities more attractive places to start a company in some ways. The last funding report I saw showed Denver received slightly more VC dollars than Boulder. Too soon to tell if that means the center of gravity is shifting towards Denver or just a product of some large funding rounds in a given year. VCs in Colorado are also a little more dispersed with nothing like Sand Hill Road, which is another defining feature of the valley.”

“I would not pay anyone to help you raise your first round of funding. As a seed stage investor, one of the things we are evaluating in diligence is the founder’s ability to raise capital, and it can be a red flag if you have to pay somebody to do this for you. If you’re starting a company you expect to grow rapidly and consume capital, you better learn how to raise money. Educate yourself by reading Venture Deals by Brad Feld, talk to other founders in your area and ask how they got funding, get in front of the local angel investor group, look for state grants for high tech companies. Paying a percentage is common on crowdfunding platforms or later stage deals, but we’ve never seriously looked at a seed stage deal using a banker.”

“The cap is meant to protect note holders from paying more than the company was worth at the time of their investment, which is what the cap number should reflect. Note investors typically convert at the lesser of A) ~20% discount to what the next equity investors pay or B) the valuation cap. As a seed investor that often invests using convertible notes, I am much more focused on the cap than the discount. If we get less than a 2x markup on our investment from Seed to Series A, then we probably paid too much; so the 20% discount only comes in to play in a short-term bridge or a company not doing great.”

Career