Episode Details

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
• Choosing the right investor - value add vs money
• Lightning round

Resources

• Full show notes: https://saasclub.io/178
• Join 5,000+ SaaS founders: https://saasclub.io/email