Elizabeth Yin, co-founder and general partner at Hustle Fund, discusses SaaS fundraising for early stage startups, including tips on approaching investors, valuations, and finding value-add investors. She also shares insights into the importance of velocity and customer acquisition unit metrics, as well as where to find potential investors and the types of SaaS businesses the Hustle Fund is interested in. The podcast also includes a quick Q&A and insights into Elizabeth's passion for open water swimming.
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insights INSIGHT
Fundraising Disparity
Fundraising success isn't solely about business acumen but also about presentation and demographics.
Factors like pedigree, communication style, and background can influence investor decisions.
volunteer_activism ADVICE
Investment Criteria
Focus on velocity and customer acquisition unit economics when evaluating potential investments.
Prioritize businesses with higher margins, particularly in the SaaS space, due to better scalability.
volunteer_activism ADVICE
Optimal Fundraising Timing
Raise funds when growth is profitable but limited by available cash.
Seed stage is generally the best time due to more investors and increased probability of success.
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Elizabeth Yin watched 200 startups go through 500 Startups' accelerator and noticed that venture capital SaaS fundraising success wasn't correlated with how good founders were at running their businesses. That insight led her to launch Hustle Fund, a pre-seed fund built around one metric - speed of execution.
Elizabeth breaks down SaaS fundraising 101 into three seed stages: pre-seed (zero to $30K MRR), seed ($30K-$1M run rate), and post-seed ($1M-$3M run rate). She shares how to pack 10-20 investor meetings into one week, test startup funding valuation with a small lower-priced tranche, and keep pitch emails to five bullet points.
Elizabeth Yin is the co-founder and general partner at Hustle Fund. Previously she founded LaunchBit (acquired 2014) and led the accelerator program at 500 Startups. She evaluates venture capital SaaS deals based on velocity, not pedigree.
🔑 Key Lessons
🎯 Know the three stages of venture capital SaaS before you start: Pre-seed is zero to $30K MRR, seed is $30K to $1M run rate, and post-seed is $1M to $3M - each stage has different investor pools and expectations.
💰 Test valuation with a small first tranche: Offer a small portion of your round at a lower cap using a YC SAFE, then raise the valuation if it fills easily - this creates urgency and gives real market data.
⚡ Pack 10-20 investor meetings into one week: Moving all investors through decisions simultaneously creates urgency and prevents the common problem of one investor being ready while another hasn't started.
🧠 Keep your venture capital SaaS pitch to five bullet points: Problem, solution, traction, market size, and team - investors spend 5-30 seconds on emails, so brevity gets the meeting.
🤝 Choose investors who fill your specific gaps: Technical founders should seek investors with SaaS customer acquisition experience. Founders outside major cities should recruit a Bay Area investor for downstream introductions.
Chapters
Introduction
Elizabeth's favorite quote - shoot for the moon
What Hustle Fund is and who it invests in
Elizabeth's background - LaunchBit, 500 Startups, Hustle Fund
The disconnect between venture capital SaaS and execution quality
Pattern matching in VC - pedigree, demographics, extroversion
What makes Hustle Fund different - velocity over pedigree
Customer acquisition unit economics at pre-seed
Why SaaS margins make venture capital SaaS investing easier
When bootstrapped founders should start raising a seed round
The 2018 fundraising landscape - three stages of seed
How to get started with SaaS fundraising
Fundraising from outside Silicon Valley
How much capital to raise - work backwards from milestones
Pitching do's and don'ts - two-stage pitch strategy
Five-slide deck and brevity as the top differentiator
Valuation strategy - supply, demand, and testing tranches
The SaaS Podcast - AI, Growth & Product-Market Fit for SaaS Founders 