My name is Jake Stein. I am the Co-founder and CEO of Common Paper. 

Before this, I was Co-founder of 2 B2B software companies. One was called RJMetrics, which was acquired by Magento. The other was called Stitch, acquired by Talend.

At Common Paper, our big picture vision is to turn contracts into APIs. We've created what's effectively the SAFE for software sales. 

The other side of our business is operating as a contract management software platform.

In my first startup, we bootstrapped for the first 3 years and ultimately went on to raise about $25M in total. 

For Common Paper, we’re a Seed stage company. We've raised $7M in total. 

For this company, we raised the funding right away. Our Seed was co-led by Boldstart and Uncork. We also went through Y Combinator after our Seed round.

We then raised a small Seed extension right after YC. If you add up the initial fundraise YC money plus the extension, that gets us to $7M.

My co-founder Ben Garvey and I knew there were unique aspects of Common Paper, particularly that it would take a while to get going.

Our strategy was all about building credibility for the standard agreements. Because of this, we knew we would have to recruit a really fantastic lawyer as one of our first hires.

We knew this was a business we would have to raise money upfront for, as it would take a lot of time to build credibility and get traction for a standard. 

We were fortunate on a number of dimensions. It was a good time in the market to be raising a seed round. Because of this we had a number of options.

We were talking to people who we either knew personally or who we had strong one-degree connections to. 

The other type of investor we spoke with was people who had extremely specific domain expertise in what we wanted to build.

We ended up with 4 term sheets that were all on really great terms. Each investor brought something a little bit different to the table. 

The reason we ultimately ended up choosing Boldstart and Uncork was because we had worked with both of them before as they had invested in my previous companies. 

We knew how they acted in both good and bad times. We knew that when they said they were going to do a thing, they actually did a thing. 

There were certainly times where they could have made our life way harder, but didn’t.

They would of course give us tough love when they needed to, but that level of trust is something that is hard to replicate with someone that you’ve only had a couple of conversations with over a month or two.

As mentioned in the last answer I’d worked with them previously. 

But one thing that’s potentially unusual is that I reached out to both of them somewhere between 3-6 months before we decided to go start fundraising. 

A batch of research calls I did included Ed from Boldstart, Jeff Clavier, and Andy McLoughlin at Uncork. This was not a fundraising conversation, it was more about telling them what I was working on. 

I’d ask them a series of questions such as, what do you think? Are there people you think I should talk to? If I was pitching this to you, what would get you really excited? What would you be skeptical of?

It was basically doing customer research but instead of customers, it was with investors. 

Those were really great calls because I wasn't trying to come away with a term sheet. I was trying to come away with sort of telling me the questions that are going to be on the test.

I was already planning on doing more research, more prep, and more thinking about this. 

It's not only about what I need to do in order to get money from these people, but also these people are really smart.

So if they have questions that I haven't thought of, or if they have skepticism that I don't have, I should think hard about that.

I had first calls with maybe 8 investors. 3 or 4 of those I had some form of personal connection with. 

The other 3 or 4 were through warm intros. 

I asked a few close friends, who are investors of later stage funds or founders who I know really well, “if you could invest from anybody from the world for this kind of business, who would it be?”

I had first calls with all 6-8 of those and probably had second calls with something like 50% of those. 

I then ultimately reached a term sheet from each of those second calls. Like I mentioned above, this was a good time to be fundraising. 

I didn't need to spend any time convincing people there was a problem. 

Everybody who's involved in B2B software or B2B sales knows the pain of contracts, thinks they're annoying, and how much they slow down deals.

Sometimes I would give a little bit of a preamble for that, but certain investors would say “ya, we know it sucks.” We’d then move on from there.

I would try to connect my experience to that problem with how I validated this with a lot of people. 

Then the big point I was trying to get across was that not only was there a big market opportunity just to solve this, but turning contracts into API opens up other large adjacent markets as well.

I’d re-emphasize that the opportunity was actually even bigger than they probably realized. 

The next piece was telling them where we thought the right wedge was in terms of how we’re going to go from nothing to getting traction. 

The last piece was telling them that we were the right team to do this and that we were legit founders.

I was transparent about the fact that I was talking to other people. When I got a term sheet from one investor, I would tell the others. That certainly gave us more negotiating leverage. 

The other thing that I did was set expectations from the start. I’d say that I was hoping to decide the partner we're going to work with relatively quickly. 

I’d ask them about their decision timeline because I wanted to be respectful to that, but I also wanted to set my own expectations.  

That piece is important because it can be used to hold them accountable later in the process if timing becomes an issue.

The last thing that really helped, and it helps with a lot of negotiations, is having credible alternatives. That lit a fire under everybody. 

In addition to Boldstart and Uncork, we also have a great group of angels and another fund called Crew Capital invested in the Seed round. 

Boldstart and Uncork invested the majority in the round. The minority of the round came from the other folks.

It was actually much easier to get the vast majority of the money from the co-leads than it was to get the 10 or 20% that was left over. 

We did end up with a great group of angels and people who have really relevant expertise and people I really respect, but it's just a lot of one-on-one conversations with a lot of wasted time.

Some of them were people who had not invested in startups before, and some of whom were attorneys. 

They were attorneys who knew a lot about companies and the legal side, but were just not familiar with the norms of startup investing. 

These investors would ask for stuff that, in my opinion, is not relevant to the decision about whether or not to invest in a startup. 

Things like our articles of incorporation and our charter. I also could have handled this better and guided them in the right direction.

The other thing that I thought was very enlightening for me was the fundraising right after YC Demo Day.

The YC Demo Day creates an incredible dynamic, giving tremendous leverage to the startups.

I had some unique challenges around then, which we knew going into YC, but we decided to do it anyway, where my wife was due with our first child right around demo day.

My co-founder Ben did an amazing job with the presentation, and we debated if we needed more money at that point. 

We ended up letting many of those leads cool because I was on leave for a bit due to the birth of my daughter.

We did ultimately raise the additional money and we got what we wanted with a great group of additional investors and more money from the existing investors. 

But one of the things that was interesting was the drop off rate of people who were interested the day of demo day versus people who were still interested 3 or 4 weeks later, when I was back and ready to have those conversations. It dropped off a lot.

A lot of people raise vehicles that are directly tied to demo day. 

The other thing is that because we wanted all those people to be in an AngelList roll-up vehicle, and we were doing a priced round and not a SAFE, that created a challenge for a lot of those people because they raised mini funds that invest in YC Demo Day.

We did find great people that invested, but there were some people who wanted to invest and were fine with the valuation, but they couldn’t invest in a priced round or through AngelList. 

I talked with my attorney and he basically told me that we had set this whole thing up on the assumption that everybody would be going through this other path. 

He said that we could absolutely change that, but before he did that work, he broke out what those legal fees would look like. 

A significant portion of the check that person was going to write was going to go toward the legal fees for making it happen.

So we didn’t end up doing that work, but some of those investors said that they had a portion of the fund that they had the power to do whatever they wanted with.

Those investors ended up using those funds and investing in Common Paper.

Fundraising is something you should ideally spend as little time on as possible. 

It's really important to raise money and to have good partnerships, but I try to control the amount of time I spend on it.

Raising money is mostly a one-way door and who you raise money from is also mostly a one-way door.

If you are a bootstrapped company today, you can usually go from being bootstrapped to VC-backed.

But it’s very hard to stop working with investors. It happens that people buyout their investors, or get a different partner from the fund, but it's not very common. 

It's not easy and it’s a big distraction.

Another thing is that raising money converts wins into losses. If you haven't raised any money, and you sell the company for $5M, that is awesome. You are rich and it's an unambiguous win. 

If you are 2 co-founders and you raise $7M, and then you sell the company for $5M, that is a loss. At least according to the contracts, you end up with $0. 

There's a lot more companies that can be sold for $5M than $100M, and a lot more that can be sold for $100M than $1B. 

Thinking about going down the VC path is extremely important, because it’s very hard to reverse. It's harder to stop working with a VC than it is to get divorced. 

If things go well, you're going to work with this person for a decade. 

Lastly, the person really matters. It kind of dwarfs the other considerations. The valuation, the economics, all that stuff matters too. 

But also, you’re going to die someday. So how do you want to spend your life?

I absolutely love Ed from Boldstart and Andy from Uncork. They're fantastic. If I was starting a new company tomorrow, they would be the first people that I would talk to without a doubt.

YC is not necessarily the right thing for every founder and every business, but it was tremendously valuable for us. And I think it's really special and unique.

The folks at Crew Capital are not people I’d previously worked with. I started talking to them when it was just Brandon and Daniel, 2 UiPath executives.

They've really built out into a fund. I know a lot of the people there and I think they're great. 

YC has some template decks that they make available and they're extremely lo-fi, but I absolutely used those starting points, even before we did YC. 

One thing that I take for granted is that I worked at a VC fund for the first few years of my career. 

I've heard there's a book called Venture Deals by Brad Feld. He's really smart. I haven't read that book, but I would read that or something like that so you can understand the vocabulary.

The brand of the VC fund matters almost not at all. 

The person you work with matters an insane amount. It matters so much who the human is that you're going to check in calls with and who’s going to be at your board meetings.

The other thing is a quote from my previous confounder, Bob Moore:  “Nobody is coming to save you.” 

A great investor can certainly help and they can pour fuel on the fire, but they can't help you get product market fit. They can't hire a great team for you. They can't do great customer support for you. 

They can really just amplify what you are. The investor is going to help you do more of what you're already doing.