Two Types of Startups: Spikes and Explainers
1. Key Themes
Theme: Startups fall into two investor-legibility categories, Spikes and Explainers, and knowing which you are should drive your fundraising strategy
The framework itself
Harris argues that investor legibility, rather than business quality, determines how a raise will unfold, and that self-classification should guide timing, investor selection, and pace.
"There are two major classifications of startups, at least insofar as investor 'legibility' is concerned. Knowing which you are will help guide the decision on when to raise, who to raise from, and how quickly to run your process. I call them Attention Spikes and Explainers."
What makes a Spike
Spikes get funded because of one narrow, standout attribute: the team or the traction.
"Spikes are companies that generate investor excitement based on one specific, relatively narrow part of their company. The clearest spike is the team. If you previously founded a unicorn, or you and your cofounders were researchers at a frontier AI lab, you will get funded."
What makes an Explainer
Explainers lack an immediate attention-grabbing signal and must earn conviction through education and relationships.
"Explainers are businesses that can and can and do raise, but that don't have an immediate attention-grabbing signal. These founders have to actually explain what they do and why it's interesting."
Theme: Founder and team quality is the dominant signal from seed through early growth
Investors are concentrating bets on people
Harris references the prior chapter's conclusion that team-centric investing now extends well beyond seed.
"As we discussed in the previous chapter, investors are doubling down on the centrality of founders and early team to guide bets from seed all the way through early growth rounds."
Theme: The traction bar is historically high, and relative outperformance is what matters
Traction must stand out against a hot field
Traction qualifies as a Spike only if it is exceptional in both magnitude and quality relative to peers.
"Massive revenue, extreme growth, incredible technical accomplishments. We're living through a stretch where the bar for traction is incredibly high. Yet if your growth, or the quality of it, stands out relative to everything else that will catalyze a raise."
Theme: Spike and Explainer status can only be diagnosed through net-new investor reactions
The diagnostic test
Self-assessment is unreliable; fresh investor behavior is the real signal, and each outcome prescribes a different playbook.
"The paradox, though, is that you can't know which one you are without contact with investors. Your existing investors will have an opinion, but they're wearing rose-colored glasses. The true test is how net new investors react towards you."
2. Contrarian Perspectives
Explainers are often the most valuable companies long-term
Conventional wisdom treats the hottest, most-chased deals as the best ones. Harris argues the opposite: the companies that are hardest to raise for often have better underlying economics for investors because of lower entry prices, less competition, and proprietary insight.
"I find these companies fascinating because they're often the most valuable ones long-term. The pricing is usually lower, there are fewer competitors, and the founders tend to know things other people don't. But they will have a harder time raising because, at first glance, they may not look venture-scale."
Your existing investors are a biased signal
Founders typically lean on current backers for fundraising feedback. Harris cautions that insiders are poorly calibrated to how the market will receive you.
"Your existing investors will have an opinion, but they're wearing rose-colored glasses. The true test is how net new investors react towards you."
Spike excitement is perishable and hard to time
Rather than treating investor enthusiasm as a durable asset, Harris frames it as fleeting and unpredictable, which argues for moving fast.
"Leverage that excitement to secure money while the investor attention lasts. Spikes have a time-dependant nature to them that is surprisingly difficult to predict."
3. Companies Identified
No specific companies are named in the article. Generic archetypes are referenced:
- Unicorn founders / frontier AI labs (archetypes, not named firms): Cited as examples of team-based Spikes.
"If you previously founded a unicorn, or you and your cofounders were researchers at a frontier AI lab, you will get funded."
4. People Identified
- Aaron Harris — Author of the newsletter (Postround) and of a book-length guide on raising venture capital. Mentioned as the source of the Spikes and Explainers framework.
"This is the fifth chapter in a book-length guide I'm writing about how to raise capital in a vastly different venture landscape."
No other individuals are named.
5. Operating Insights
Run a fast process if you're a Spike
If investors are chasing you, compress the timeline and take capital before attention fades.
"If investors are falling over themselves to meet you and flying you places on jets, you're a Spike. Leverage that excitement to secure money while the investor attention lasts."
Pre-build investor relationships if you're an Explainer
Do the groundwork well before the raise so that trust and understanding already exist when you need capital.
"Explainers have to do the most work ahead of their raises. Specifically, they need to develop deep investor relationships to build the trust and understanding that enables investors to spend enough time with the company."
Feed your believers evidence and time
If you're chasing meetings but have a few genuine supporters, focus on showing momentum and giving those believers material to build conviction.
"Your job is to demonstrate that the business is getting more interesting by the day. Cultivate investors and give your believers the time and material to build conviction."
6. Overlooked Insights
Traction is judged on quality, not just quantity
The passing reference to "the quality of it" suggests investors discriminate on the nature of growth (e.g., durability or efficiency), not only headline numbers.
"Yet if your growth, or the quality of it, stands out relative to everything else that will catalyze a raise."
Explainers may fail the "venture-scale" glance test despite being strong businesses
The initial screening problem is perception, not fundamentals. Companies can be penalized for not pattern-matching to venture-scale at first look, which may create an arbitrage for investors willing to dig in.
"But they will have a harder time raising because, at first glance, they may not look venture-scale."