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Fundraising in AI with Aaron Harris

46 min episode · 2 min read
·
Aaron Harris

Episode

46 min

Read time

2 min

Topics

Investing, Startups, Fundraising & VC

AI-Generated Summary

Key Takeaways

  • Fundraising scale data: Successful Series A processes require 48 first pitches on average to generate one term sheet, with 40-50 investor meetings compressed into two to three weeks creating competitive dynamics and FOMO.
  • Dilution planning: Founders should target 20% dilution at Series A and 15-20% at Series B, but must track cumulative dilution from SAFE rounds which often reaches 50% pre-Series A due to complex post-money calculations.
  • Revenue quality metrics: Investors now scrutinize six-month usage patterns after contract signing, not just contracted revenue, to identify whether AI tool adoption sustains or decays rapidly before renewal cycles, changing evaluation criteria significantly.
  • Market discovery problem: 1,700 different funds led 2,700 Series A rounds across US and Europe in 2022-2024, yet most founders can only name 100-120 funds, creating massive opportunity in systematic investor discovery and targeting.

What It Covers

Aaron Harris shares tactical frameworks for AI fundraising, covering hype cycle dynamics, valuation strategies, investor psychology, and how to determine if raising capital makes sense for your specific situation.

Key Questions Answered

  • Fundraising scale data: Successful Series A processes require 48 first pitches on average to generate one term sheet, with 40-50 investor meetings compressed into two to three weeks creating competitive dynamics and FOMO.
  • Dilution planning: Founders should target 20% dilution at Series A and 15-20% at Series B, but must track cumulative dilution from SAFE rounds which often reaches 50% pre-Series A due to complex post-money calculations.
  • Revenue quality metrics: Investors now scrutinize six-month usage patterns after contract signing, not just contracted revenue, to identify whether AI tool adoption sustains or decays rapidly before renewal cycles, changing evaluation criteria significantly.
  • Market discovery problem: 1,700 different funds led 2,700 Series A rounds across US and Europe in 2022-2024, yet most founders can only name 100-120 funds, creating massive opportunity in systematic investor discovery and targeting.

Notable Moment

Harris reveals some founders raised hundreds of millions during 2021 hype cycles and now operate zombie companies with massive cash reserves, minimal revenue, and inflated valuations that trap both founders and investors in uncomfortable stalemates.

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Episode Transcript

Hey, everybody. This is Ben Kesnoka, cofounder and partner at Village Global, a network driven venture firm. And this is our podcast where we go deep on all things business and technology with world leading experts. Welcome to the AI fundraising master class we have here for Village Global. My name is Sam Kershner. I'm a vice president here. We're joined by Aaron Harris of Mog Ead and Co. Aaron spent seven years at y Combinator and infinitely built out their series a program for their founders. He since advised hundreds of a and b rounds and helped founders go on to raise more than 3,000,000,000 in funding. Today, he's gonna be sharing some pro tips on fundraising in the age of AI. We'll be taking q and a during his talk and after as well, so feel free to throw any questions that you have in during the chat throughout. I'll bring folks up to be asking questions on this. Notice that we'll have people, be able to to actually be on screen. If you have your video on, then we'll actually have you bring up the question yourself so you can ask it on your own. If you don't have your video on, like you're on the move or something and your video is off, then we're not gonna ask you to come up. I'm just gonna ask that question for you. And with that, Aaron, we'll let you take it away. Amazing. Thank you so much for the intro. I'm gonna share my screen so you can see what I'm looking at. But before I I start, like, two major notes about the presentation. One, as Sam mentioned, ask questions whenever they come up. The the less I talk at a stretch, the happier I am. Though I've been accused of enjoying the sound of my own voice. And the second thing is anything that I say in the presentation that sounds as if it's kind of black and white advice, shouldn't be treated that way. Everything here is is at best a framework, a way to understand, certain situations. But advice for startups, advice in general, but specifically for startups is only useful, insofar as it's directly applied to your situation, your company, your investor set, your progress, all those things. And so you always have to translate it through that lens. If you don't, you end up just making weird mistakes. So, always, like, think about it from there. Okay. Well, let's go to this thing. I'm gonna share. I think that's the right window. Alright. Okay. So, Sam did a great job introducing me. The the only things I'll say otherwise are, I I spent a long time at YC, built series a program, also was the first investor in deal, in scale, in Rappi, and a bunch of other really cool companies. And then through the series a program that I built there, as Sam mentioned, we did about 200 series a's and …

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