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If they have 150m active users of which many spend money... why do they need to raise money?
by philliphaydon 6y ago
If they have 150m active users of which many spend money... why do they need to raise money?
- blowfish721 6y agoMy thought exactly. If they can’t make enough money on their own with that many users then how can they be valued so high.
- anonytrary 6y agoIf you can do X, then you will imagine X + 1.
- onion2k 6y agoSame reason as any other company needs to raise money - to grow faster than their cashflow will allow. A business having healthy revenue, or even healthy profit, doesn't mean they can afford to achieve their ambitions right now. Raising enables them to do more. The fact a business is raising money is rarely a sign that they actually need money; companies raise because they want money to do something. Heck, if your company genuinely needs money raising is much harder because there's a real risk of the business failing.
- martinald 6y agoI don't disagree, but for healthy cashflow companies, surely debt is a better option?
- jannes 6y agoI think it has something to do with founders being able to take money "off the table" when they raise a round.
- simonebrunozzi 6y agoIf you're in a tight race against other companies which also raise large sums of money, and in markets where "winner take all" effects happen; then, it might still make sense to raise money. Normally, though, you are probably right.
- martinald 6y agoYes I do agree, but surely you'd want to tap out all the debt first before going to equity raises. Very rarely see any debt raised in startups, so quite interesting behaviour.
- jiveturkey 6y agoCompanies at late stage also need to raise money to establish valuation. That doesn't seem to be the case here though.
- MichaelZuo 6y agoIf late stage implies that the founders have already been diluted significantly, why would they would want to be diluted even more? (Assuming they still believe in the future of the company)
- marcinzm 6y agoBecause they believe the extra money will allow them to increase the valuation more than it dilutes them.
- MichaelZuo 6y agoI can’t really think of one example really where that actually ended up in favor of the founders. Even Kalanick’s Series D raise at Uber back in 2014 seemed a bit weird, and in retrospective given what happened since... I imagine for it to be actually net beneficial there would still need to be at least 5x or 10x growth potential and assuming it’s already a unicorn that somehow can’t finance otherwise on favorable terms... would imply a quite unique situation.
- scotty79 6y agoBecause you might prefer to do some things that cost more money rather sooner than later?
- casi 6y agoThe universe isnt going to turn itself into paperclips.
- scsilver 6y agoThey are pushing to capture older users and create a market place of grittier games to help monatize the mostly younger player base. They are also pushing to internationalize the product.
- pxue 6y agoS1 shows China ambitions. Need capital to break into a complete new market.