Investor Herd Dynamics
Paul Graham breaks down the herd mentality in startup investing, where one investor's interest triggers a cascade. He outlines four drivers: fundraising decreases risk and increases a company's value; founder confidence rises, impressing investors; mediocre investors rely on others' judgment; and competing term sheets impose deadlines. He cautions that a stampede doesn't guarantee success, and shares practical negotiation tactics, such as never revealing other VCs' identities. Drawing from firsthand Y Combinator experience, the essay offers a clear-eyed view of fundraising dynamics for founders.
August 2013
The biggest component in most investors' opinion of you is the opinion of other investors. Which is of course a recipe for exponential growth. When one investor wants to invest in you, that makes other investors want to, which makes others want to, and so on.
2013年8月
多数投资者对你的看法中，最大的一部分来自其他投资者的看法。这自然会导致指数级增长：当一个投资者想投资你，就会让其他投资者也想投资，进而引发连锁反应。
Sometimes inexperienced founders mistakenly conclude that manipulating these forces is the essence of fundraising. They hear stories about stampedes to invest in successful startups, and think it's therefore the mark of a successful startup to have this happen. But actually the two are not that highly correlated. Lots of startups that cause stampedes end up flaming out (in extreme cases, partly as a result of the stampede), and lots of very successful startups were only moderately popular with investors the first time they raised money.
有时，经验不足的创始人会错误地认为操纵这些力量就是融资的本质。他们听说过成功初创公司引发投资狂潮的故事，就以为这是成功初创的标志。但事实上，二者关联并不大。很多引发狂潮的初创公司最终都失败了（极端情况下，部分原因正是狂潮本身），而很多非常成功的初创公司在首次融资时也不过是受到投资者适度的欢迎。
So the point of this essay is not to explain how to create a stampede, but merely to explain the forces that generate them. These forces are always at work to some degree in fundraising, and they can cause surprising situations. If you understand them, you can at least avoid being surprised.
因此，本文的目的并非教你如何制造狂潮，而仅仅是解释产生狂潮的驱动力。这些力量在融资过程中始终存在，并可能导致意外情况。理解它们，至少能让你避免措手不及。
One reason investors like you more when other investors like you is that you actually become a better investment. Raising money decreases the risk of failure. Indeed, although investors hate it, you are for this reason justified in raising your valuation for later investors. The investors who invested when you had no money were taking more risk, and are entitled to higher returns. Plus a company that has raised money is literally more valuable. After you raise the first million dollars, the company is at least a million dollars more valuable, because it's the same company as before, plus it has a million dollars in the bank.
[1] An accountant might say that a company that has raised a million dollars is no richer if it's convertible debt, but in practice money raised as convertible debt is little different from money raised in an equity round.
投资者会因为你受其他投资者青睐而更青睐你，原因之一是你实际上变成了更好的投资。融资降低了失败的风险。的确，尽管投资者厌恶这种做法，但你完全有理由对后续投资者提高估值。早期在你没钱时投资的人承担了更多风险，理应获得更高回报。而且，一家融到资金的公司实际上更有价值：当你融到第一百万美元后，公司至少多值一百万美元——因为和之前是同一家公司，只是账上多了一百万美元。
[1] 会计可能会说，如果融资是通过可转换债券进行的，公司并未因此更富足，但实际上，通过可转换债券融来的钱与股权融资几乎没有区别。
Beware, though, because later investors so hate to have the price raised on them that they resist even this self-evident reasoning. Only raise the price on an investor you're comfortable with losing, because some will angrily refuse.
[2] Founders are often surprised by this, but investors can get very emotional. Or rather indignant; that's the main emotion I've observed; but it is very common, to the point where it sometimes causes investors to act against their own interests. I know of one investor who invested in a startup at a $15 million valuation cap. Earlier he'd had an opportunity to invest at a $5 million cap, but he refused because a friend who invested earlier had been able to invest at a $3 million cap.
不过要小心，因为后期投资者非常讨厌被提价，甚至会拒绝这一显而易见的逻辑。只对你能够接受失去的投资者提价，因为有些人会愤怒地拒绝。
[2] 创始人常常对此感到惊讶，但投资者确实非常情绪化。更确切地说是愤慨——这是我观察到的主要情绪；而且非常普遍，有时甚至会让投资者做出违背自身利益的事。我知道一位投资者，他在一家初创公司的估值上限为1500万美元时进行了投资。而在此之前，他曾有机会以500万美元的上限投资，却因为之前一位朋友能以300万美元上限投资而拒绝。
The second reason investors like you more when you've had some success at fundraising is that it makes you more confident, and an investors' opinion of you is the foundation of their opinion of your company. Founders are often surprised how quickly investors seem to know when they start to succeed at raising money. And while there are in fact lots of ways for such information to spread among investors, the main vector is probably the founders themselves. Though they're often clueless about technology, most investors are pretty good at reading people. When fundraising is going well, investors are quick to sense it in your increased confidence. (This is one case where the average founder's inability to remain poker-faced works to your advantage.)
投资者在你在融资上取得一些成功后会更青睐你的第二个原因是，这会让你更自信，而投资者对你的看法是他们评估你公司的基础。创始人常常惊讶于投资者似乎能迅速得知他们融资进展顺利的消息。虽然信息确实有很多途径在投资者间传播，但主要载体可能就是创始人自己。尽管投资者经常对技术一窍不通，但多数人非常善于察言观色。当融资进展顺利时，投资者能很快从你增加的自信中感受到。（这是普通创始人无法保持面无表情却对你有好处的一个例子。）
But frankly the most important reason investors like you more when you've started to raise money is that they're bad at judging startups. Judging startups is hard even for the best investors. The mediocre ones might as well be flipping coins. So when mediocre investors see that lots of other people want to invest in you, they assume there must be a reason. This leads to the phenomenon known in the Valley as the "hot deal," where you have more interest from investors than you can handle.
但坦率地说，投资者在融资启动后更青睐你的最重要原因，是他们不擅长判断初创公司。即使对于最优秀的投资者来说，判断初创公司也很困难。平庸的投资者几乎就像在抛硬币。所以，当平庸的投资者看到很多其他人想投资你时，他们就会认为一定有原因。这导致了硅谷所知的“热门交易”现象——你得到的投资者兴趣超出你的处理能力。
The best investors aren't influenced much by the opinion of other investors. It would only dilute their own judgment to average it together with other people's. But they are indirectly influenced in the practical sense that interest from other investors imposes a deadline. This is the fourth way in which offers beget offers. If you start to get far along the track toward an offer with one firm, it will sometimes provoke other firms, even good ones, to make up their minds, lest they lose the deal.
最优秀的投资者不太受其他投资者看法的影响。将自己的判断与其他人的平均只会稀释其判断力。但他们也会在实际上受到间接影响：来自其他投资者的兴趣会带来一个截止期限。这是“报价催生报价”的第四种方式。如果你与一家公司的谈判已接近拿到报价，有时会促使其他公司（甚至是好公司）下定决心，以免错过交易。
Unless you're a wizard at negotiation (and if you're not sure, you're not) be very careful about exaggerating this to push a good investor to decide. Founders try this sort of thing all the time, and investors are very sensitive to it. If anything oversensitive. But you're safe so long as you're telling the truth. If you're getting far along with investor B, but you'd rather raise money from investor A, you can tell investor A that this is happening. There's no manipulation in that. You're genuinely in a bind, because you really would rather raise money from A, but you can't safely reject an offer from B when it's still uncertain what A will decide.
Do not, however, tell A who B is. VCs will sometimes ask which other VCs you're talking to, but you should never tell them. Angels you can sometimes tell about other angels, because angels cooperate more with one another. But if VCs ask, just point out that they wouldn't want you telling other firms about your conversations, and you feel obliged to do the same for any firm you talk to. If they push you, point out that you're inexperienced at fundraising — which is always a safe card to play — and you feel you have to be extra cautious.
[3] If an investor pushes you hard to tell them about your conversations with other investors, is this someone you want as an investor?
除非你是谈判高手（如果不确定，那你就不是），否则要非常谨慎地使用这一招来推动优秀投资者做决定。创始人经常这样做，而投资者对此非常敏感——甚至有些过度敏感。但只要你说的是实话，就没问题。如果你与投资者B进展顺利，但更想从投资者A那里融资，你可以告诉A这个情况。这并非操纵。你确实处于两难境地：你更想从A那里融资，但在A尚未决定时，你不能安全地拒绝B的报价。
但是，不要告诉A投资者B是谁。风投有时会问你在和其他哪些风投谈，但永远不要告诉他们。对于天使投资人，有时可以透露其他天使，因为天使之间的合作更多。但如果风投追问，就指出：你不会希望我把你们的谈话透露给其他公司，我也有义务对任何与我交谈的公司保密。如果他们继续施压，就说你在融资方面没有经验——这永远是安全牌——因此必须格外谨慎。
[3] 如果一个投资者强烈要求你透露与其他投资者的谈话内容，这样一个人你还想让他成为你的投资者吗？
While few startups will experience a stampede of interest, almost all will at least initially experience the other side of this phenomenon, where the herd remains clumped together at a distance. The fact that investors are so much influenced by other investors' opinions means you always start out in something of a hole. So don't be demoralized by how hard it is to get the first commitment, because much of the difficulty comes from this external force. The second will be easier.
Thanks to Paul Buchheit, Jessica Livingston, Geoff Ralston, and Garry Tan for reading drafts of this.
虽然很少有初创公司会经历投资狂潮，但几乎所有的公司在初期都会经历这种现象的另一面——群体保持距离地聚集在一起。投资者如此受其他投资者意见影响的事实意味着你一开始就处于某种劣势。所以不要因为获得第一笔承诺如此困难而沮丧，因为大部分困难来自这种外部力量。第二笔就会容易些。
感谢 Paul Buchheit、Jessica Livingston、Geoff Ralston 和 Garry Tan 阅读本文初稿。