4 ms·
Should you let a VC invest in your seed round?
- tptacek 16y agoI'd like to hear stories about companies that had a VC in an early round that didn't have that VC in a successful follow-on round and that weren't clearly, obviously, notably "killing it" in the market already. You can say there are ways to navigate this problem, but it seems to me that negotiation timing and valuation are core skills VC's have that you don't have, and a VC that gets in on your seed round probably knows they have you over a barrel and can effortlessly make things hard for you. It's not just signalling; it's that it concedes a huge negotiation advantage to the participating VC, right? (NB: I'm interested in this story not because I'm likely to go out for VC ever [again], but because it adds to the annals of "taking VC is hazardous to your company health").
- eladgil 16y agoI know of one company in particular that raised $1 million for their entire seed from a VC. 1 year in the VC partnership decided things weren't going well enough to invest more, and they shut down when they couldn't raise money. I can't name specific names publicly here, but it was a clear situation where the VC was not acting maliciously - he literally told me friend (the entrepreneur) that the partnership decided the company was no longer worth partner time.