Jeff (Startup Whisperer)

For founders based outside the United States, deciding whether to raise capital from American venture capitalists before or after entering the US market is a pivotal and also a costly strategic decision. The optimal approach depends on your industry, market readiness, and operational objectives. Drawing on recent data that we analysed, here’s a comprehensive look at the factors that should guide your choice.

Key Data on Overseas Startups Raising in the US

A study of 153 overseas startups that raised capital in the US reveals several notable trends. On average, these companies secure their first US investment 4.3 years after founding. Nearly 45% obtain US funding within two to five years, while only about 13% do so in their first year. Interestingly, startups founded after 2015 reach US investors more quickly, with those established in 2020 averaging just 1.6 years to their first US investment (due to 2021 bull run).

Patterns: US Hiring vs. Fundraising

The sequence of US hiring and fundraising varies by industry and can influence the scale of capital raised. About 30% of companies hire US employees before securing US funding, a pattern most common in healthcare, biotech, and payments sectors, typically resulting in lower initial capital raised. Roughly 35% raise US funding before making local hires, a trend prevalent in fintech, software, and IT, and these companies tend to secure larger funding rounds. A smaller group, around 14%, hires and raises in the same year, while a niche 3% raise US capital without hiring locally, often in remote-first or specialized sectors. The data suggests that startups raising before hiring in the US are more likely to secure larger investment rounds.

Industry and Geography: What Shapes the Sequence

Industry and geographic origin play a significant role in shaping US entry strategies. Life sciences and regulated sectors, such as healthcare and biotech, often prioritize hiring US talent before fundraising. This approach is driven by the need for local expertise, regulatory navigation, and credibility with investors and customers. In contrast, digital and software startups-especially in fintech and enterprise IT-frequently raise US capital first, leveraging product traction and global relevance to attract investors before building a local team. Startups from Southeast Asia and Australasia are more likely to establish a US presence before fundraising, signaling commitment and reducing perceived execution risk for American investors.

Strategic Implications for Founders

Fundraising Before US Expansion

This approach is best suited for SaaS, fintech, and enterprise software platforms with strong product-market fit and global appeal. Securing US funding before establishing local operations preserves capital for growth, demonstrates capital efficiency, and allows startups to test US market demand before making significant investments. Typically, these companies secure US investment and then set up US operations within two to three years.

Hiring Before Fundraising

For regulated or capital-intensive sectors like healthcare, biotech, or financial services, hiring US talent or leadership before fundraising is often essential. Building a local team enhances credibility, accelerates regulatory approvals, and signals long-term commitment to the market. The typical path involves recruiting key US personnel, setting up local operations, and then approaching US investors.

Simultaneous Approach

Some startups, particularly those with ample resources or operating in highly competitive sectors, pursue parallel strategies-raising funds and hiring in the US simultaneously. While this maximizes speed and market learning, it requires greater capital and operational bandwidth.

Best Practices for US Market Entry

Successful US market entry requires more than just capital or a local presence. Deep market research is essential; founders should avoid assuming that US buyers behave like those in their home markets and must localize their value proposition accordingly. Strategic partnerships with established US players can accelerate credibility and market access, sometimes reducing the need for immediate local hires. Phased rollouts-starting in select regions-allow startups to test and adapt before scaling nationally. For regulated industries, early legal and compliance planning is crucial to avoid costly delays. While many US investors still prefer local teams, especially at early stages, there is a growing acceptance of remote-first models and global teams.

Practical Guidance by Sector

For enterprise software and fintech startups, focus on demonstrating product traction and global relevance. It is often possible to raise from US investors before hiring locally, but you should have a clear plan for US expansion. In healthcare and biotech, prioritize hiring or partnering in the US before fundraising, as local presence is often a prerequisite for regulatory and investor confidence. Regardless of your sector, align your US hiring and fundraising strategies with your operational capacity and market readiness. Investors seek both commitment and capital efficiency.

“There is no universal rule, but your US hiring strategy should align with your market readiness, funding strategy, and operational capacity. Investors want to see commitment, but also capital efficiency and product clarity.”

Bottom Line

There is no one-size-fits-all answer to whether overseas startups should raise capital before or after entering the US market. The optimal sequence depends on your industry, business model, and market strategy. For most SaaS and digital startups, raising capital before building a US team is often preferable-but this usually requires exceptional traction that signals the potential for a 20x or greater return. In regulated or high-touch sectors, establishing a US presence first is crucial to unlocking investor interest and market access. Many successful startups blend both approaches, adapting as they learn from the market and investor feedback. Ultimately, careful planning, deep market understanding, and a tailored strategy are essential for a successful US entry and fundraising journey.

Investing in Southeast Asia for many years now, I’ve witnessed cycles of growth, correction, and reinvention. Yet, the current moment feels uniquely challenging—and transformative. The sectors emerging at the forefront for the next few years—B2B and deep tech—are ones where many of us have struggled to find consistent success over the last decade, especially compared to B2C and fintech. At the same time, our fund sizes have grown larger than ever, but the market size we operate in hasn’t proportionally expanded. This mismatch creates a tension that demands we rethink how we approach risk, ambition, and execution.

Since the 2022-2023 crash, large VC funds have increasingly gravitated toward safer, private-equity-like deals while becoming more multi-stage. It’s understandable; preserving capital feels prudent in uncertain times. But playing it safe won’t build the future. We cannot afford to give up on audacious founders—those who dare to think big and aim for transformative impact. These are the people who will unlock new markets, redefine industries, and create outsized returns—not just for investors but for society as a whole.

To thrive in this new era, we must retool and reinvent ourselves as investors. This means recalibrating how we assess risk, developing deeper expertise in emerging sectors, and being smarter and more calculated in our bets (keeping Power Law Distribution firmly in mind). It’s not about reckless optimism; it’s about supporting bold ideas with discipline and clarity.

This is a call to action: let’s not retreat into comfort zones or limit our vision. Let’s figure out what needs to change—within ourselves, our teams, our ecosystems, our founders, and our strategies—and make those changes happen. The future belongs to those willing to take calculated risks on founders with big dreams. Let’s ensure we’re part of building that future.

As we journey through the fascinating world of top venture capitalists, we uncover a treasure trove of insights that shed light on the educational backgrounds, career paths, and the shifts in the demographic landscape of the industry. This data-driven exploration aims to provide a comprehensive view for limited partners, aspiring VCs, and students, as we delve into what makes these venture capitalists stand out.

Key Insights and Importance of Education

Top Undergraduate Universities

- Stanford University (13% of VCs)

- Harvard University (8%)

- MIT (7%)

- University of Pennsylvania (4%)

- Yale University (3%)

Stanford's dominance is unmistakable, emphasizing its pivotal role in the tech VC landscape.

Top Undergraduate Majors

- Engineering, Computer Science, and Related Disciplines (30%)

- Economics (17%)

- Business or Management (11%)

- Public Policy, Political Science, or Government (8%)

- Mathematics & Applied Mathematics (6%)

The importance of a STEM background remains evident, but there's a significant representation of business-related studies, reflecting the need for a multifaceted skill set.

Graduate Education

Graduate Degrees: 67% of VCs hold graduate degrees from esteemed institutions:

  - Stanford GSB (14%)

  - Harvard Business School (12%)

  - Columbia Business School (3%)

  - Wharton School, University of Pennsylvania (3%)

  - MIT Sloan School of Management (2%)

This trend speaks to the value placed on continuous learning and specialization in fields like business, finance, and technology.

Entrée into the Venture Capital Arena

- Direct Entry: 23% of VCs under 45 started their careers directly in VC, compared to only 13% for those over 45. This early specialization trend highlights a demand for nuanced expertise at the outset of one's career.

A New Generation's Rise

- Technical Backgrounds: 38% of VCs under 45 vs. 25% over 45, indicating an industry shift toward tech-savvy investors.

- Investment Banking: Investment banking serves as an initial career path for 45% of young VCs vs. 30% of their older counterparts, showcasing the sector's increasing integration with venture capital.

Experience and Impact in VC

- Founder Experience: 29% of VCs under 45 were founders, in contrast to 37% for those over 45, signifying a slower but still prevalent trend of operational experience.

- Analytical Backgrounds: Both cohorts show high levels of analytical savviness, with older VCs boasting experience in diverse roles like sales, strategic planning, and product management.

Diversifying Demographics

- Female Representation: A gradual increase in the younger cohort to 12% vs. 8% for older VCs, signaling progress in industry diversity.

- International Backgrounds: 36% of top VCs have international roots, underlining the global nature of venture capital, with significant representation from China, India, and Europe.

Key Insights for Stakeholders

For Limited Partners

- Invest in funds with multi-generational VCs to leverage industry trends and seasoned experience.

- Recognize the evolution in career paths, with younger VCs more likely to have an analytical or entrepreneurial background.

For Aspiring VCs and Students

- While technical education is advantageous, business and economic knowledge is equally important for understanding the broader market dynamics.

- Seek internships in investment banking, consulting, sales, or product management for hands-on experience.

Advances in Venture Investment Trends

- Industry Evolution: The venture capital landscape now leans towards sector specialization, with notable increases in tech-focused investments (most recently in AI).

- Diversification: Despite incremental progress in gender diversity, the industry recognizes the need for further internationalization and broader inclusivity.

In conclusion, the profile of top venture capitalists has evolved, adapting to changing industry needs, educational trends, and innovation. The combination of technical knowledge, diverse professional backgrounds, and a nuanced understanding of market dynamics remains key to navigating the entrepreneurial journey and gaining success in venture capital.

Art by Ivan Dubovik

Firstly, let me apologize for this really tardy post. I have been wanting to post this back in late 2019 and again in mid 2021. Startup activity and valuations crept higher in late 2019 due to the launch of several new funds in 2018 in Southeast Asia, followed by more capital inflows from US, Europe, Korea, Japan, India and China.

In 2020, we had a short burst of panic from March to July 2020 but investments restarted with smaller rounds and finally back in full vengeance from the start of 2021. This contributed to the best year ever in 2021 in terms of capital inflow in our region. To top it off we had interests from US SPACs and direct IPOs with companies in Southeast Asia. 

At the moment with the public market correction and uncertainty coupling with the effects of the US inflation due interest rate hikes and the war in Ukraine. There is a fear that this will come to the private markets, and yes it will. Valuations are 50-70% over valued since years before the pandemic.

What are the reasons? I will briefly touch on two.

1. We have not experienced a correction in Southeast Asia since the GFC contributing to a strong growth of new founders and investors in our ecosystem. In addition, without a flow of exits like quick acquihires, M&As and IPOs, many of our companies remain private with mostly paper gains and when IPOs do arise, early investors are cashing out and not invested for growth. As such, the quality of founders and investors reduces over time. This gives rise to undisciplined investments in companies where unit economics and growth rates are blurred between companies that gives venture returns vs those who don't. Finally the pandemic don't help in with the situation as it also gives rise to a postponement of performance and extension of rounds with little to no causation to performance.

2. Compressed funding rounds spread out over a shorter period of time in order to capture market share became more prevalent. If research on market size, adoption and timing is not done well, the execution of the business will be impacted. Overselling of our region's size and growth without relying on real business or consumer drivers affects the speed and consistency of market adoption. Hence some valuations of companies fails to be justified with performance. The region is still an emerging one, its maturity may sometimes be far from what we expect, making business projections difficult to forecast. 

So what do you if you are a founder or investor?

1. For new startup founders - Work on and refine your 12 year plan and capitalization strategy and find valuation comparables that are realistic to achieve. This is not an easy exercise but an exercise you have to do nevertheless.

2. For operating founders post Series A - Speak to Series C and D investors and ask them what are they expect of your business milestones and try to close that knowledge gap.

Besides the usual rhetoric of telling you to tighten your belt and extend your runway to over 18 months, you need to be operating your business at a level that will interest capital providers who have now sharpened their pencils. The silver lining here is there is still a large over hang of venture capital raised in 2020/2021 but trust me the investors will be more stringent going forward. Realign your approach to performance once you are clear of what is expected of you. There are situations when it is too late to turn back, and this will lead you to take a strategic option that unfortunately is the best path ahead for your company, employees and shareholders. 

I foresee higher stress levels for founders in the next few quarters. Do lean on your trusted network of advisors, mentors and coaches to help guide you through whatever is coming. 

If you need help or someone to talk, do reach out to me or the team at Coachable Initiative. 

Keep your heads up, we got this.