- Dan Siroker, a founder of AI startup Rewind, is telling investors to pay up if they want to meet.
- He’s charging $100 for bookings in an effort to conserve his most precious resource: time.
- It’s a sign that the frothy AI startup market is edging into insanity.
The venture capital industry has mostly been a tale of woe in the past year, with thousands of startups struggling to raise money and many shutting down.
For some lucky founders, though, the market is as frothy as it’s ever been, and edging into the realm of insanity again.
A couple of days ago, startup founder Dan Siroker set his sights on meeting new investors. He anticipated so many VCs clamoring to meet that the entrepreneur decided to whittle down the field and make some money (for charity) while doing it.
“We can’t meet with everyone so to make sure you are serious and it’s a good use of our time, we are requiring a $100 payment to meet. First come, first served,” he tweeted on Thursday.
Over a thousand investors
Not all founders can do this, to be sure. Based on how his previous fundraise went, Siroker was already bracing for a deluge of Zoom calls.
Last spring, the founder shared a link to the pitch for his startup Rewind, along with a form so anyone could make an offer to invest. After a few weeks, over a thousand investors expressed interest.
Siroker closed the process with 170 bids to sift through. He ended up raising $12 million for Rewind at a valuation of $350 million.
Siroker told Business Insider this week that he isn’t actively fundraising. Rewind has enough cash in the bank from that last round to grow and operate for another four years, he explained.
Rather, he’s meeting with investors now so he can build relationships over time.
“This company is my life’s work,” he said in a direct message. “That means I’ll be working with these investors for at least a decade or more. I want to make sure it’s the right long-term fit, and so getting to know them over more than just one or two meetings is important to me.”
Rewind’s digital assistant records everything a person does on their computer and makes it searchable. The recordings are stored locally on an individual’s computer to mitigate privacy concerns. The service has a free tier and a $19 monthly subscription that unlocks more robust features.
Rewind came out of stealth in late 2022 with millions from Andreessen Horowitz, First Round Capital, and others. Siroker says his startup has 22 employees now.
The hottest companies are getting funded, while the rest fight for scraps
VCs falling over themselves to meet startup founders — and paying for the privilege — is a sign that at least some parts of the startup funding environment are back to boom times.
However, charging investors may be at odds with building a healthy, long-lasting partnership with investors.
Siroker said that while he’s asking for cash as “an efficient way to know who was serious and who wasn’t,” the experiment has a knock-on effect of weeding out the self-important investors.
“I also want investors who don’t have such a big ego and believe in our company so much that they’d be willing to swallow a bit of their ego and would be happy to pay to meet,” he said. “Most investors think entrepreneurs should kiss their ring. This selects for the ones without ego.”
This is just one example of the extreme divide between haves and have-nots in Silicon Valley right now.
A large number of startups staved off death during the past two years by cutting costs and headcount. But as the pools of cheap money they raised early in the pandemic run dry, many will be forced to go to market for capital this year.
They won’t all succeed. The same scarcity of capital for startups is hurting funds. Last year, the industry notched 474 funds closed, the lowest count since the tech bull run began in 2013, according to PitchBook data. The cash raised fell to about $70 billion from $173 billion in 2022.
Investors have told BI they’re seeing more binary outcomes as they spread much less capital to fewer companies.
“When deals get hot, there is extreme interest,” Ben Lerer, managing partner of Lerer Hippeau, an early-stage venture firm, told Business Insider’s Ben Bergman late last year. “But if you are on the wrong side of it, there’s not a cent.”
Investors are still swooning over artificial intelligence-powered software, apps, and infrastructure, part of the reason for the growing divide, says Dick Costolo, the former chief executive of Twitter and now managing partner at 01 Advisors, a newer early-stage firm.
This week, BI reported that Perplexity, a startup that’s taking on Google with a smarter search engine, is raising additional funding at a considerably higher valuation, just months after it closed $74 million from investors.
The funding bonanza in artificial intelligence shows no sign of slowing down. Anthropic and OpenAI closed new rounds at face-melting valuations last month. Google, Nvidia, and OpenAI employees are striking out on their own and raising gobs of cash for new startups.
“Even if you’re going to be investing in early growth, you need to see them when they’re just getting started and get to know the team and have them get to know you — because these things get preempted,” Costolo said. “If you’re not there long before the raising, you’re not part of the conversation.”
Siroker is counting on investors to do so. By Friday afternoon, he said he’d collected $900 from nine investors willing to pay to meet.
Though one person replying to Siroker’s tweet suggested he mark the proceeds from meetings as revenue for his business, Siroker told BI he plans to donate the money to the Boys & Girls Clubs and Build, a nonprofit that teaches students how to be entrepreneurs.
