The Future of Startup Funding

Paul Graham’s essay The Future of Startup Funding argues that startup funding is fundamentally shifting as founders gain power relative to investors.

The Opportunity

Startups increasingly need hundreds of thousands rather than millions. VCs’ business models require large investments. This mismatch creates space for new investor types.

Super-Angels as Disruptors

“The super-angels are really mini VC funds” competing directly with traditional VCs. Unlike VCs treating angel investments as deal flow, super-angels focus entirely on early-stage funding.

Predicted Changes

Angel Rounds Will:

• Use rolling closes instead of fixed sizes
• Employ convertible notes with valuation caps
• Remove traditional lead investor management
• Feature standardized paperwork

VC Evolution

Some will adapt by doing more, smaller deals. Others will drift into later-stage investing without realizing the shift.

The Broader Vision

Empowering founders benefits everyone. Founders understand their companies better than investors. “Make something people want” applies to the investment process itself.

My Takeaway

Removing investor-related stress makes entrepreneurship more attractive, ultimately increasing deal flow and benefiting everyone.

How has startup funding changed in your experience? I’d love to hear at persdre@gmail.com.