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"We didn’t really need the capital, per se." Why exchange equity for capital if it's not necessary?
by orik 11y ago
"We didn’t really need the capital, per se."
Why exchange equity for capital if it's not necessary?
- jaksmit 11y agofor one, you don't know how the environment and access to capital might change. So it might make sense to take some cash whilst it's available.
- vecter 11y agoIt derisks the company at low cost because you're raising money on great terms. It's almost always a good idea to have extra cash in the bank, especially when that cash comes. I once heard a quote along the lines of "the company that wins the space is the last one to raise funding before the funding market turns south."
- ffyyg 11y agoAnd if you gave even 1x prefs on that vanity raise, then you've turned your "okay not great" outcomes into bad outcomes. Rule of thumb: if somebody raises at exactly or just over s billion, they did it because it feeds their ego and every other excuse is just an excuse.
- vecter 11y agoWhere did I mention vanity as a part of the raise? You missed all of the points I made and then attacked a strawman. When you raise on your terms, as these guys probably did, you get (1) a great valuation (i.e. cheap money) and (2) great terms (i.e. 1x or better liq pref).
- joevsthevolcano 11y agoBecause you're running payroll. You could lose it all pretty quickly if you screw a few things up.
- eli 11y agoBest time to raise money is when you don't need it.