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There is actually a very good reason why a VC-backed/VC-backable business shouldn't take 100M from Softbank at a 1B valuation: Because it removes the possibili
by el_nahual 5y ago
There is actually a very good reason why a VC-backed/VC-backable business shouldn't take 100M from Softbank at a 1B valuation:
Because it removes the possibility of exiting for tens or hundreds of millions--the preference stack will eat up all the equity.
Most VC backed companies that exit do so for far less than a B; if the startup has been responsible about fundraising then a 50M, 100M, etc exit can be life-changing for the founders. Raising too much makes this impossible and turns the whole venture into much more of an all-or-nothing affair.
Of course, the VCs don't care: they make money from the big winners, so they could care less about a 50M exit, but the founders should not.