Why Your VC Choice Matters More Than Your Valuation

Happy New Year! Starting 2026 with a topic that doesn't get enough airtime: the VC you choose matters exponentially more than the valuation they offer.

I know, I know. When you're grinding to raise your seed round and finally get a term sheet, the number on the page feels like the only thing that matters. I've been there. But having watched this play out firsthand at telli (YC F24), I can tell you the investor backing your company creates ripple effects you won't see for months—or even years.

Let me break down why.

The Signal Game (And Why It's Not Optional)

Here's what most founders don't realize: your investor is a signal, not just a source of capital.

When I joined telli as the first commercial hire, we weren't just another sales automation startup. We were "telli (YC F24)." That badge did more heavy lifting than any pitch deck ever could.

1. The Hiring Magnet

Good investors = good talent signal. Period.

When you're trying to hire a world-class engineer or a senior sales leader, they're not just evaluating your product or your vision. They're evaluating risk. And one of the fastest ways to de-risk a startup is to show that smart money believes in you.

If you're backed by YC, Sequoia, a16z, or any other top-tier firm, candidates take you seriously by default. Your inbound response rate goes up. Your offer acceptance rate goes up. You're suddenly competing for talent you had no business competing for three months ago.

The inverse is also true. If you raise from a no-name fund or angels without strong track records, you'll work twice as hard to convince top talent to take a bet on you.

Real talk: At telli, we closed hires who had multiple offers from later-stage companies—purely because they saw "YC F24" and thought, "These guys are the real deal." That signal saved us months in recruiting.

2. The Fundraising Flywheel

Your seed investor sets the tone for every round that follows.

When you go to raise your Series A, the first thing investors ask isn't "What's your revenue?" It's "Who backed you?" If the answer is a name they respect, you've passed the first filter. If it's not, you're fighting uphill.

Prestigious VCs do three things for your next round:

• Validate your market thesis - If YC or Sequoia invested, future investors assume you're in a real market
• Improve your valuation leverage - Competition among investors increases when there's strong backing
• Make intros easier - Top VCs have deep networks and will connect you to the right people for your A

I've seen this firsthand. When telli started conversations for follow-on funding, doors opened faster because we had YC on the cap table. Investors trust other investors they respect. It's a network effects game.

If you raise from a weak syndicate at seed, your Series A will be harder, take longer, and likely come at a worse valuation than if you'd taken slightly less money from a better firm.

3. The Ecosystem Edge

This is the one that surprised me most: the value isn't just money—it's the ecosystem.

Good VCs give you access to three things most founders underestimate:

a) Operational Expertise

When you're scaling from $150k to $800k ARR in four months (like we did at telli), you hit problems you've never seen before. Hiring, pricing, retention, you name it.

Having investors who've seen this movie 50 times means you get advice from people who actually know the answers. YC's office hours alone saved us from making expensive mistakes.

Bad VCs? They'll cheer you on. But when you hit a wall, they can't help you climb it.

b) Peer Network

Being part of a strong VC's portfolio connects you to other founders solving similar problems. The YC community is insane for this. Need to know the best rev ops tool? Ask in Slack. Want feedback on your pricing model? Grab coffee with a batch mate.

This peer learning is worth more than most people realize. You don't have to figure everything out alone.

c) Free Resources (That Actually Matter)

Let's talk money. Not the funding—the credits.

Through YC, we got:

• $500k in OpenAI credits (massive for our AI-powered product)
• $100k+ in cloud credits (AWS, GCP, etc.)
• Free access to tools that would've cost us $50k+ annually (Stripe, Brex, etc.)

That's real runway extension. If you're burning $50k/month, those credits are another 2-3 months of life. In early-stage startup land, that can be the difference between hitting product-market fit and running out of cash.

Bad VCs don't have these partnerships. You're on your own.

So What Should You Do?

If you're raising, here's my advice:

1. Optimize for the investor, not the valuation. A $3M round from a great VC beats a $4M round from a mediocre one. Every. Single. Time.

2. Ask about their value-add. What operational support do they offer? What's their portfolio community like? What resources do they provide? If they can't answer clearly, that's your answer.

3. Check references. Talk to other founders they've backed. Ask: "Did they help you when things got hard?" If the answer is lukewarm, walk away.

4. Think long-term. Your seed investor will likely be on your cap table for 7-10 years. Choose someone you'd want in the trenches when revenue flatlines or your co-founder quits.

The Bottom Line

Your VC isn't just writing a check. They're co-signing your startup's story. They're opening doors. They're giving you permission to play at a higher level.

Choose wisely. The signal compounds.

This week's challenge: If you're fundraising, list out the top 10 VCs you'd want to work with—not based on who will give you the highest valuation, but based on who will make your next three years easier.

Here's to building with the right people in your corner.

Until next Sunday, William

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P.S. — I'm always happy to chat about fundraising strategy, especially for AI/sales tech startups. If you're raising or thinking about it, feel free to book a call through my site.