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I think you can raise a comparable amount of funds for a distributed team, it will just be with fewer investors and at a lower valuation. The valuation will be
by sytse 8y ago
I think you can raise a comparable amount of funds for a distributed team, it will just be with fewer investors and at a lower valuation.
The valuation will be lower since an acquisition is less likely. Most acquirers of companies under $100m want the acquired employees to join their office. Since this is unlikely with a distributed team there will be a discount on the acquisition price of up to 50%.
There was an upside to this. Since distributed companies make for a less valuable acquisition target our investors are aligned with our plan to become a public company https://about.gitlab.com/strategy/#sequence- https://about.gitlab.com/strategy/#sequence-
For public companies being remote is less of an issue since financial metrics are much more important and in the case of an acquisition they would likely stay as a separate entity.
- tixocloud 8y agoThis will be a challenge for me as my investors already feel the company has the potential to be an acquisition target for one of the big guys and feels we should be building it that way. We’re also based in the U.K. and am not sure how many Saas platform tech companies become public.
- sytse 8y agoYou will have to get to a liquidity event, 99% of the time this is an acquisition or going public. It is not very motivating for you and the team to build for an acquisition. If you want to go that route be careful how much you raise, every pounds has to paid back 3 to 10 times.
- tixocloud 8y agoWhich is why I have a slight headache. I’m really impressed and what you guys have done and am extremely interested in your journey so far. Would you be able to spare me 10 mins for a quick chat? I’m a first time founder and really want to learn as much as I can so I don’t screw it all up.