If you're not in SF, don't raise VC.

One of the most common questions founders ask is whether they should raise capital.

I asked myself that same question in late 2021, when I wanted to start a company after two years working as a software engineer.

But the real question was not whether I should raise. It was a much more uncomfortable one that very few people answer honestly: Can I raise capital on terms that do not kill my company before it even starts?

Wanting to raise is not the same thing as being able to raise well. After years analyzing the ecosystem, my short answer is brutally simple: if you are not planning to move to San Francisco, in most cases raising venture capital does not make sense.

If you cannot access top-tier terms, VC is often not fuel. It is debt disguised as ambition.

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1. Geography determines viability

Over the last four years, I have spoken with funds in Latin America, worked with recognized angel investors, and connected with people from other ecosystems.

In October, I shared a panel with an associate from a fund in Egypt. He told me their standard check is $100K for 10% of the company.

For many founders in Latin America, Asia, or Africa, that sounds reasonable. In San Francisco, giving up 10% for that amount is basically giving your company away. Worse, it can become an immediate red flag for future global investors. It signals that you raised cheap or from a position of desperation.

The difference is structural:

• San Francisco has excess capital (dry powder).
• More importantly, it has real exit liquidity (M&A and IPOs).

In most local hubs, limited liquidity forces investors to protect downside with aggressive terms. Local VCs are not villains. They are necessary, and without them things would be worse. They simply cannot compete with SF pricing power.

The problem is that once you accept those terms, you are often out of the top-tier game by default.

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2. The dilution math trap

This is not only about money. It is about basic math. I have seen the divergence between founders coming out of elite programs (YC, Neo, HF0, SPC) and founders coming out of local or second-tier accelerators.

Assume the same starting point for both: you raise $200K for 7% (around a $2.8M post-money valuation). So far, dilution is healthy. The problem explodes in the next round.

Local or standard path

Someone coming out of a program like Techstars (or similar) may raise $500K at a $5M valuation. That is only a 2x step-up, and it costs another 10%.

Result: after raising $700K total, founder dilution is already 17%.

San Francisco Tier 1 path

Someone coming out of YC may raise the same $500K at a $15M+ valuation.

Result: after the same $700K total, cumulative dilution is only 10.33%.

That gap, about 6.7 percentage points, is enormous. In the first scenario, by Series A, founder ownership can be so compressed that major investors question long-term motivation. Same dollars. Radically different cost.

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3. Money buys time. Signaling buys your future.

Money alone does not solve product-market fit. But startups are a statistical game. More capital with less dilution means more iterations and longer survival.

The most valuable invisible asset is signaling. Programs like YC or Neo act as quality stamps that pull in Tier 1 funds (a16z, Sequoia, Benchmark, Lightspeed). Then a self-fulfilling loop starts: better funds invest more, on better terms, and open doors to better customers and talent. That unfair advantage compounds.

The opposite is also true. Many other programs create neutral or negative signaling. I have heard investors explicitly say they avoid startups from certain programs because historical portfolio outcomes are weak. In those cases, the program does not just fail to help. You have to work twice as hard to prove you are not a bad bet.

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4. The zombie-company danger

This is where the human cost appears. I have seen too many founders in Latin America raise between $200K and $1M, then operate for 3, 5, even 7 years. They have revenue, team, and relentless effort.

But in VC terms, they become zombies. And many of them do not realize it.

They are not growing fast enough for a global Series A, and their cap table is already too messy from bad early rounds. They get trapped:

• They cannot raise high-quality follow-on capital.
• They cannot sell for a life-changing outcome.

Imagine five years of brutal stress, below-market founder salary, and constant uncertainty, only to close or sell for scraps. You tell yourself you are "in the game." You try to avoid scarcity mindset by betting that you will be the outlier. But the hard truth is that you never had enough chips to play the real game. Your odds were near zero from day one because of the terms you accepted.

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5. Strategic humility: upgrade your profile before you jump

If you compare a brilliant founder in LatAm with someone selected for the Thiel Fellowship, the difference is usually not IQ. It is track record and network. For that second founder, raising a large seed, paying a real salary, and keeping control is much easier.

I write this from personal experience, because it was my case.

In Latin America, my profile is objectively solid:

• I worked directly with a Rappi cofounder ($5.2B company).
• I cofounded a company with a Shark Tank investor.
• I went through a selective accelerator.
• I have technical experience as a software engineer.

I know I am capable. But I was also brutally honest: if my track record said OpenAI or Stripe, or a Stanford background, the same person would face a very different fundraising path. I realized my background, even strong locally, could still be optimized for the major leagues.

This is not about doubting your ability or making yourself smaller. It is about playing the same game, under the same conditions, as the teams that win global championships. That is why I decided to pause my founder path in 2026.

My conclusion is firm: most founders in emerging markets would do better by spending one or two years in San Francisco, working at a high-growth company, and then building.

(In fact, this pattern is common across LatAm unicorn founders, but it is rarely highlighted enough.)