4 ms·

I am wondering - why did you decide to raise outside money at all? I assume you would have been able to do the round yourself, save time / effort around the fun

I am wondering - why did you decide to raise outside money at all? I assume you would have been able to do the round yourself, save time / effort around the fundraising process and concentrate on product instead?

faramarz 9y ago
It's market/opportunity validation when you can convince others to share the risk.
vit05 9y ago
Probably because he expects people who are financing to become customers and help tell other friends in the industry how amazing the company is. "It’s not just about the capital, but about getting a funnel of companies and individuals that could be potential customers as Atrium"
downandout 9y ago
I have often wondered the same thing when similarly successful people raise money for startups. With $X00 million in the bank, it would be better to self-finance for $10.5MM that if they truly believe in the business. However, if they believe that the probability of success is very low, I suppose it would make sense for them to use their name to get others to take the financial risk for them. For this reason, as an investor, I would shy away from stratospherically wealthy entrepreneurs looking for money, but SV VC's seem quite willing to give money to people that don't need it.
- justin 9y ago
  This assumes you believe that investors can't help you succeed in your business. I believe our investors can help us a lot.
  - downandout 9y ago
    Fair enough. I was speaking generally. In the case of this specific venture, you may very well turn out to be correct. Good luck with your new business!
    - justin 9y ago
      Thank you! To expand on my point further: the same logic could be used to say entrepreneurs with the means to do so should only pay employees in cash and not equity (because you can afford to do so and believe the equity will have higher economic value ultimately). However, pretty much all seasoned founders I know want to compensate employees with some equity, under the theory that those employees will be more motivated to see the business be successful. I think the same logic applies to your investor base (which is one of the selling points that crowd funding sources like Angel List or Funders Club maintain).
      - jacquesm 9y ago
        > However, pretty much all seasoned founders I know want to compensate employees with some equity, under the theory that those employees will be more motivated to see the business be successful. AKA Golden Handcuffs of the lesser variety.
  - gist 9y ago
    What I say is: 'I'd rather have your connections than your money'. As someone who helps investors with some of their investments that is often a missed point. Reviewing your list of investors I've worked with several of them. Knowing exactly who to call to get an answer, advice, or help can be just as important or actually more important than money. Obviously. I remember when an investor approached me many many years ago to buy something that I was selling that the firm wanted. I remember thinking 'I'd rather have access to your connections than your money'.
- redler 9y ago
  There's great value in showing that people other than yourself — people who have found other market-validated successes — have enough confidence to put skin in your game.

faramarz 9y ago

It's market/opportunity validation when you can convince others to share the risk.

vit05 9y ago

Probably because he expects people who are financing to become customers and help tell other friends in the industry how amazing the company is. "It’s not just about the capital, but about getting a funnel of companies and individuals that could be potential customers as Atrium"

downandout 9y ago

I have often wondered the same thing when similarly successful people raise money for startups. With $X00 million in the bank, it would be better to self-finance for $10.5MM that if they truly believe in the business. However, if they believe that the probability of success is very low, I suppose it would make sense for them to use their name to get others to take the financial risk for them. For this reason, as an investor, I would shy away from stratospherically wealthy entrepreneurs looking for money, but SV VC's seem quite willing to give money to people that don't need it.

justin 9y ago
This assumes you believe that investors can't help you succeed in your business. I believe our investors can help us a lot.
- downandout 9y ago
  Fair enough. I was speaking generally. In the case of this specific venture, you may very well turn out to be correct. Good luck with your new business!
  - justin 9y ago
    Thank you! To expand on my point further: the same logic could be used to say entrepreneurs with the means to do so should only pay employees in cash and not equity (because you can afford to do so and believe the equity will have higher economic value ultimately). However, pretty much all seasoned founders I know want to compensate employees with some equity, under the theory that those employees will be more motivated to see the business be successful. I think the same logic applies to your investor base (which is one of the selling points that crowd funding sources like Angel List or Funders Club maintain).
    - jacquesm 9y ago
      > However, pretty much all seasoned founders I know want to compensate employees with some equity, under the theory that those employees will be more motivated to see the business be successful. AKA Golden Handcuffs of the lesser variety.
- gist 9y ago
  What I say is: 'I'd rather have your connections than your money'. As someone who helps investors with some of their investments that is often a missed point. Reviewing your list of investors I've worked with several of them. Knowing exactly who to call to get an answer, advice, or help can be just as important or actually more important than money. Obviously. I remember when an investor approached me many many years ago to buy something that I was selling that the firm wanted. I remember thinking 'I'd rather have access to your connections than your money'.
redler 9y ago
There's great value in showing that people other than yourself — people who have found other market-validated successes — have enough confidence to put skin in your game.