This video is a lecture by Y Combinator's Managing Director Michael Seibel explaining how to effectively pitch seed-stage startups to investors. He shares practical advice on capturing investor attention, standing out by pitching clearly, concisely, and understandably, and achieving successful fundraising. He particularly emphasizes the importance of forgetting bad fundraising advice and learning a new approach.

1. Introduction to YC (Y Combinator) and the Importance of Pitching

At the start of the lecture, Michael Seibel explains YC's philosophy, saying that YC understands the struggles startup founders face and strives to provide founders with an unfair advantage. YC gives founders the feeling that they're not alone, builds a community that has each other's backs, and creates an environment where they can maintain belief day after day.

YC is one of the most prolific startup scouting groups in the world, a place where diverse ideas are encountered and mutual inspiration flows.

"There's this feeling inside that all founders share. If you're crazy enough to do a startup, you should have each other's backs. YC is trying to give founders an unfair advantage."

Getting into the main lecture, Michael reveals that today's topic is "how to pitch your company." He honestly says that the fundraising process is one of the most painful things founders go through.

"Founders remember every investor who told them 'No.' They harbor a special -- I wouldn't say 'hatred' -- but a special feeling toward them. And they want to prove them wrong."

He explains that he will share the advice YC gives to companies at the seed stage -- specifically before PMF (Product-Market Fit) -- and emphasizes that the goal is to help founders unlearn the bad fundraising advice they've already absorbed.

2. Core Principles of Effective Pitching: Brevity and Clarity

Michael emphasizes that the most important thing in a pitch is that it must be concise and easy to understand. After conducting over 2,000 YC interviews, he realized that if an investor doesn't know what the company does, they can't invest.

"The way you stand out is by being concise and easy to understand. A lot of what I'm going to say today won't sound sexy. But it works."

He advises that while many founders try to inject energy and flash into their pitches, being concise and clear actually stands out far more.

Pitches share these common elements:

• What do you do?
• Who is on your team?
• What is your traction?
• What are your unique insights?
• What is your market size?
• What is your ask?

3. Effective Strategies for Each Pitch Element

3.1. What Do You Do?

You should explain what your company does in two sentences and provide specific examples. Using Airbnb as an example: "Airbnb lets every homeowner rent out their apartment online. It processes payments online and takes a commission on every booking."

The importance of examples: Specific examples stick in investors' memories.

"Imagine a waiter living in Washington D.C. when every hotel room is booked for Obama's 2009 inauguration. He can rent out his apartment and make 2-3 months' rent. He takes photos of his apartment, posts them on Airbnb, and Airbnb handles the payment and connects him with good guests."

Common mistakes:

• Using customer-facing language: Investors are not customers. Use simple language instead of jargon or complex terminology. Website copy is for customers, not investors.
• Obsession with 100% accuracy: The goal is 80% accuracy with 100% clarity. Trying to explain every detail only causes confusion.
• Overly generic examples: Non-specific examples don't stick in memory.
• Not clearly explaining the problem and solution: The problem and solution should be naturally woven into the example.
• Not telling investors what the company does on the first slide: Starting with a logo-only slide means investors see the next slides without knowing what the company does. Asking directly is also a good approach.

  "Did you understand what I just explained? Do you need another example?"

3.2. Your Team

The purpose of the team slide is to explain who is on the team, what their roles are, and what impressive achievements and qualifications they have. When possible, connecting how the problem was personally experienced makes it even more effective.

Common mistakes:

• No titles: If investors don't know who the CEO is, they don't know who they're entrusting their money to.
• Long-winded stories: The team slide is not an opportunity to tell your life story. There's no need for elaborate explanations unless the investor asks.
• Omitting specific achievements: Michael uses the example of a YC founder who worked on a Mars rover project -- if you've accomplished something impressive, you must mention it.

  "Tell them you developed the Mars rover software. It will be very impressive."

3.3. Traction

Traction means clearly explaining what you've accomplished since founding the company. Only use graphs when they're trending upward. Even startups that think they have no traction may have achievements worth highlighting.

Common mistakes:

• Not mentioning timeframes: Investors care about how quickly you execute. You need to specify "whether all this was done in one month or one year."
• Fake work: Activities that don't actually advance the company, like advisory surveys, don't count as traction.
• Including a traction slide when there's no traction: If your startup is only 2 weeks old, you may not have traction yet. In that case, it's better not to include a traction slide at all. Focus on describing your team instead.

3.4. Unique Insights

This section is about explaining unconventional facts you've learned about the problem, the customer, or potential solutions. However, this section only becomes effective when the audience already knows what the company does and has been impressed by the team.

Airbnb's example: Many services before Airbnb didn't process payments. Processing payments in a low-trust environment was frightening, which was a barrier for both hosts and guests. But Airbnb built trust on both sides by processing payments as a third party, and this was the unique insight that activated the market.

Common mistakes:

• Insight isn't unique: If more than half the people in the room would agree, it's not a unique insight.
• Lack of specific examples: Explain the insight by telling the story of how you learned it. (e.g., Brian Chesky's frustrating experience going to South by Southwest with a platform that couldn't process payments)
• Not using enough numbers and facts: If the insight comes from users, cite numbers and facts to make it more concrete.

3.5. Market Size

For market size, how you calculated the number matters more than the number itself. Investors need to learn from you about the number of potential customers, the fees, and why you charge those fees.

Common mistakes:

• Citing reports: Citing external reports like JP Morgan reports teaches investors nothing.
• Not showing the calculation: Show a 'bottom-up' calculation that clearly reveals the number of users and how much you'll charge each one.
• Not mentioning comparable products: Mention the pricing of competitive or comparable products to show that your pricing is reasonable.

3.6. The Ask

This is the most important yet most overlooked part of pitching. You must clearly ask for money. Based on his investing experience, Michael says that about 10% of investors may be willing to invest simply because they feel uncomfortable saying "no."

"In my experience, this can go up to 10%. I'm hoping the founder doesn't ask for money, because the pain of saying 'no' is much worse than writing a $25,000 check."

Only by asking can you seize this opportunity.

Common mistakes:

• Not asking: The most fatal mistake.
• Not mentioning social proof: Mention people who have already invested and the amount raised to boost credibility.
• Mentioning future hiring plans: Who you'll hire doesn't matter. You need to specifically state what you'll do with the money and what revenue/user milestones you'll achieve.

  "We're raising this much money and want to hit this milestone in the next 18-24 months."

4. Overall Pitch Structure and Attitude

4.1. Order and Importance of Information

After examining the individual elements, Michael points out common mistakes in the overall pitch.

• Lead with the most impressive element: Putting 'what you do' first and 'the ask' last is clear. But the elements in between should be arranged from most impressive to least.
• Investors' time is short: Investors don't listen for the full 30 minutes of a 30-minute meeting. You have to earn every 2 minutes. Don't save the good stuff for later -- put it up front.

4.2. Treat Your Pitch Like a Conversation

Rather than delivering your pitch like reading a book, you should engage investors in conversation. This is a difficult skill, but the idea is not to persuade investors -- it's to let them persuade themselves.

"Investors aren't being persuaded by you to invest -- they're persuading themselves to invest. The more they talk, the more they convince themselves to give you money."

Tips:

• Start conversations when they show interest: When an investor shows interest in a particular topic, ask questions and inquire about their experience to keep the conversation going.
• Flexibly change slide order: If an investor shows interest in a topic on your third or fourth slide, don't hesitate to jump to that slide and discuss it.
• Conversation ratio with customers: Just as customers are more likely to buy when they do 50% or more of the talking in sales, investors are also more likely to invest when they do 50% or more of the talking.

4.3. Pay Attention to the Investor

Especially in Zoom meetings, you should closely observe the investor's facial expressions to determine whether they're interested or not. Michael says he was a terrible poker player, but learned a lot from watching people's faces. Investors are bad at hiding their emotions. Their faces are like an open book.

4.4. No Distracting Slides

Michael's lecture slides were intentionally designed with the most boring, basic design possible. The reason is to ensure the audience focuses on the speaker, not the slide backgrounds.

• The trap of using designers: Designers don't know what the most important and interesting points of your pitch are. So having a designer handle slide design can lead to emphasizing the wrong things.
• Keep it visually boring: It should be clear and concise, and doesn't need to be sexy or flashy.

5. YC Pitch Demonstration and Q&A

Michael demonstrates pitching YC itself based on the principles he explained.

• What do you do: "We're a startup accelerator. We invest $500,000 at standard terms in seed-stage startups. Over the past 18 years, we've invested in the best tech startups including Stripe, Airbnb, Dropbox, Coinbase, Instacart, and DoorDash."
• Example: "When I participated in YC in my early 20s and started Justin.tv (the predecessor to Twitch), I got funded after an online application and a 10-minute interview. I spent 3 months working through the program with other founders, rapidly building and launching products. I raised money at Demo Day, and in 3 months I had money, new friends, and peak productivity. This is what YC provided us."
• Traction: "YC has invested in approximately 75 companies generating over $100 million in revenue."
• Team: "YC's current Group Partners are people who have done everything you'll do as a startup founder. Since they went through YC themselves, they can give the best advice on how to get the most out of a startup and out of YC. Most investors have never been in your position, but every YC partner has."
• Unique Insights:
  1. You can get funded just by filling out an application: This gives YC better deal flow than any investor in the world.
  2. Batch members support each other: Founders in the same batch help each other, providing advantages that competitors don't have.
  3. Running Demo Day: It's like running a fundraising auction, allowing YC companies to raise at higher valuations and with less dilution.
• Market Size: "Since YC started, there have been approximately 40+ VC-backed tech IPOs every year, generating about $10 billion in annual revenue."
• Ask: "Apply!"

In the Q&A session following the lecture, Michael answered several important questions.

5.1. Advice for Investors

An attendee from a Brazilian startup accelerator, a 10-year veteran investor, asked how to help startups struggling with PMF and fundraising.

"I can give you two pieces of advice. First, do no harm. I think I know the answers, but I'm constantly shocked by how often I'm not sure. Giving the wrong answer is often worse than asking the founder to just talk to their users." "Second, your product is your process. If receiving money from you is painful, that's a very bad sign."

5.2. A Realistic View on Starting a Startup

When asked why industry veterans hesitate to join startups and what advice to give them, Michael honestly shares his view of what founders look like.

"I once thought it was my job to persuade people to do startups, but not anymore. Doing a startup is kind of a dumb thing to do. It's too painful, and the chances of a big payoff are very low." "I think startup founders are people whose brains are a little 'broken.' Normal life is painful for them, so they do startups." "My job is to find the people for whom all these good things sound 'terrible.' And tell them, 'Welcome! Here's a community of crazy people to help you.'"

5.3. The Need for a Pitch Deck

When asked whether it's better to pitch freely without a deck, Michael says it depends on experience level.

"My co-founder Justin Kan could talk for an hour about a legal startup without a deck. But he was in his late 30s with a lot of experience." "YC's first-time founders don't have that ability. It can be hard to bring the conversation back to key points. The deck does that visually. The less skilled you are, the more a deck will help."

5.4. The Importance of Mentioning Competitors

When asked whether mentioning competitors is important, Michael advises to put them in an appendix if needed.

"If investors ask the same question 3 or 4 times, make a slide and put it in the appendix. But when I read YC applications, competitors are one of the things I barely care about." "Rather, I look for the existence of a large incumbent. Paradoxically, having a large incumbent makes me more likely to invest. Because stealing market share from a terrible incumbent is easier than creating a market from nothing." "Most of the best products didn't create markets. Airbnb, Stripe, Uber -- they all beat existing competitors, not invented markets."

5.5. Metrics for DevTool Startups

When asked what metrics a devtool startup should focus on amid open-source license changes and market shifts, Michael advises to look at the past of existing competitors.

"Many founders look at what incumbents are doing today and think it's an important signal, but I think it's much more useful to think about how they got to their first $1 million or $10 million in revenue." "Copying the strategies incumbents used when they were at your scale is much more useful. You can use this knowledge in your pitch and tell the investor, 'Actually, HashiCorp did this on their way to their first $1 million in revenue. That's why we're following that strategy.'"

5.6. Advice for Young Founders

A 23-year-old founder who lacks experience and has no technical background but wants to help people through an idea asks Michael what advice he'd give his 23-year-old self.

"The startup journey was really hard. I started with three technical co-founders and funding from YC, and it was still hard." "I compare startups to going to war. Everyone goes with passion, but what 'weapons' do you have? I think successful founders like me don't talk enough about the advantages we had when we started." "The best advice I can give you is to go get those advantages. Even if it takes 2 or 3 years, that's okay. Going to war with weapons is much better than going without them."

5.7. When to Worry About Regulatory Compliance

When asked how much a pre-launch platform should worry about regulatory and legal compliance, Michael says to wait until customers complain.

"In the early stages, I tend to focus on what real customers are complaining about and ignore everything else. Of course, you need to handle basic legal matters like incorporation, but for more complex issues, wait until customers complain."

5.8. Signals of a Successful Founder

When asked what signals, beyond degrees or big-company experience, make him believe a founder can execute their plan, Michael answers:

"Setting aside all credentials, what I care about is being shocked by what the founders have done in the last month. Making me think, 'How did you do all that in one month?'" "What differentiates the best YC teams from other teams isn't even their education or coding ability. They accomplish more in a month than their peers -- specific, tangible work." "If you tell me about what you've done in the last month and I think, 'I could never have done that,' that's what will really impress me."

Conclusion

Michael Seibel's lecture is filled with invaluable advice that fundamentally changes how seed-stage startup founders approach fundraising pitches. He emphasizes brevity, clarity, and authenticity over flashiness, and stresses that in conversations with investors, it's important to lead your own story and engage investors in the conversation. Ultimately, pitching is not merely an act of conveying information, but a process of helping investors make investment decisions on their own. He closes by reaffirming that rapid execution and persistence are the keys to being a successful founder.