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SBF
@SBF_FTX
Replying to
@SBF_FTX
23) Sketchy versions of the Fifth VC are basicaly MLM. But Virtuous versions take projects they believe in, and teams they believe in. And when they go to their friends and companies and networks and promote the company, they're just telling their truth.
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SBF
@SBF_FTX
24) "Use this", they say, "it will be great". And they stake their reputation on you, because they _do_ think you'll be great. The Fifth VC is nearly indistinguishable from 1-4, sometimes. Everyone _says_ they're #5. But there are things you can do to tell.
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SBF
@SBF_FTX
25) For instance, give them a super long lockup--do they _really_ believe in you long term? Or grill them, and make them sell you on yourself. Or watch what they say publicly, and see what they push. Do they push random crap? Or do you agree with what they promote?
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SBF
@SBF_FTX
26) The Fifth VC might seem lame. All VCs promise their network, but the Fourth also gives lots of money! If the Fifth VC really believes in you, though, they’ll give the _most_ money, because they think it’ll be worth it. And networks are great _if_ they’re really utilized.
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SBF
@SBF_FTX
27) People have limited bandwidth, and don’t care about random crap they hear. But if someone you trust says that this is the one project to watch--you listen. We’ve gotten surprising amounts of value from team #5. It pops up where you least expect it.
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SBF
@SBF_FTX
28) “Oh yeah, we onboarded because XX said you guys were cool.” “I spent 12 hours reading your ideas because YY vouched for them, and now I’m convinced.” A Fifth VC can get you a foot in the door. It’s up to you to maximize that.
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SBF
@SBF_FTX
29) And to be clear, there’s a _huge_ difference between someone who says nice things about you, and someone who really goes to bat. Finally there’s the Sixth VC, a variant on the Fifth. They’re similar except instead of giving their influence they give their advice.
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SBF
@SBF_FTX
30) The Sixth VC is great for newer entrepreneurs. There are a lot of fuckups everyone makes (I certainly did!). Pointing those out is huge. And so is noticing when you’re about to make a large error in strategic direction and telling you.
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SBF
@SBF_FTX
31) On the other hand, the Third VC does this too, because Important Smart people have advice! Telling apart a Sixth VC from a Third VC can be hard, but it’s really important.
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SBF
@SBF_FTX
32) Anyway, as a recap: ask not what a VC can do for you, or what you can do for a VC. Ask whether it really is very positive sum.
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SBF
@SBF_FTX
Replying to
@SBF_FTX
34) There are some Fifth VCs I’ve run into. Many of them are partners of SRM: projectserum.com. Some I wouldn’t have expected to be. But you can tell when someone really genuinely believes in you: their thoughts and arguments flow freely and powerfully.
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SBF
@SBF_FTX
35) There’s a parallel with community members. Those of you in the FTX community and chats can attest to how much impact Burg, and Dante, and Adebayo have had; way more impact than a random guy with 100k Twitter followers.
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SBF
@SBF_FTX
36) That’s the kind of partner you want: someone who sees what you see, and believes in you, and will fight for you. And yeah, it doesn’t hurt if they’ll also write you a big check.
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SBF
@SBF_FTX
37) Don’t fall for the classic VC pitch: we will grace you with our investment of $10, and you will give us 40% of your equity, because we are VCs, and you are a Company, and that is how we dance with each other. Find the partners you want.
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SBF
@SBF_FTX
38) And if you need funding, sure, raise from whoever! There’s nothing wrong with that, as long as you do actually need the funds, and are raising the amount you need.
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SBF
@SBF_FTX
39) So, TL;DR: 1) if you need funding, raise 2) if you don't like a VC, don't raise from them 3) if you really click with a VC, they migth fight for you, and that's awesome
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