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Looks like they raised their Series B only 1.5 years ago. Let's see how they see things 5-10 years down the road. * It's not clear if they'll be able to raise

Looks like they raised their Series B only 1.5 years ago. Let's see how they see things 5-10 years down the road. * It's not clear if they'll be able to raise another round without losing control. What do you plan to do if you run out of your current money without being profitable yet? * "investors want growth" isn't a problem as long as you're growing quickly, which posthog probably does at the moment. But once growths slows you'll probably get to know that side of them. * If you raise money at a higher valuation, the required exit size grows proportionally. Once it becomes apparent that you're not on track to reach the target size investors may push for strategies riskier than you'd prefer.

AndrewKemendo 4y ago
Precisely this Very few founders have problems with VCs prior to serious equity raises Once you're raising 100M is when investors get the froth of IPO around their mouths and around when you start having issues Fast forward 5 years into being an IPO company and now all those "Myths" are what you are spending 50% of your time as a CEO dealing with - that is unless you have Zuckerburged ownership (so rare as to be basically impossible), in which case you really only bought yourself time God help you if you miss more than a quarter of revenues or have a down round. Kiss your ownership goodbye immediately So yes, the author is right and the first few years of VC money are great! You pay the price with interest (literally) on the back end
james_impliu 4y ago
hey, I wrote this piece and realised it was here! to respond to a few of these points... > What do you plan to do if you run out of your current money without being profitable yet? We maintain default alive status (there's a good Paul Graham essay on this), and visit our growth assumptions every couple of months so that we can track to profitability. We give ourselves a $4M cushion - ie our expected low point in capital before hitting profitability (last round was $15M to give a sense), which is a fairly conservative. Worst case scenario is that if this fails, our revenue has already grown a ton since our last fundraise. > But once growths slows you'll probably get to know that side of them Fair point. I guess it's less important but still not great though if you are able to get to default alive/profitable and if you've got good terms through the first couple of rounds.
cutemonster 4y ago
> you'll probably get to know that side of them What, more precisely, is that? > not on track to reach the target size investors may push for strategies riskier than you'd prefer It'd be interesting with examples :-) Could that be e.g. Neo4j bringing their Enterprise Edition closed source? Hoping to maximize revenue ... But risking that customers jump to an OSS alternative As long as the founder has voting majority, can't s/he just ignore the investors? What happens then? Hmm, maybe there'll be no C round?

AndrewKemendo 4y ago

Precisely this Very few founders have problems with VCs prior to serious equity raises Once you're raising 100M is when investors get the froth of IPO around their mouths and around when you start having issues Fast forward 5 years into being an IPO company and now all those "Myths" are what you are spending 50% of your time as a CEO dealing with - that is unless you have Zuckerburged ownership (so rare as to be basically impossible), in which case you really only bought yourself time God help you if you miss more than a quarter of revenues or have a down round. Kiss your ownership goodbye immediately So yes, the author is right and the first few years of VC money are great! You pay the price with interest (literally) on the back end

james_impliu 4y ago

hey, I wrote this piece and realised it was here! to respond to a few of these points... > What do you plan to do if you run out of your current money without being profitable yet? We maintain default alive status (there's a good Paul Graham essay on this), and visit our growth assumptions every couple of months so that we can track to profitability. We give ourselves a $4M cushion - ie our expected low point in capital before hitting profitability (last round was $15M to give a sense), which is a fairly conservative. Worst case scenario is that if this fails, our revenue has already grown a ton since our last fundraise. > But once growths slows you'll probably get to know that side of them Fair point. I guess it's less important but still not great though if you are able to get to default alive/profitable and if you've got good terms through the first couple of rounds.

cutemonster 4y ago

> you'll probably get to know that side of them What, more precisely, is that? > not on track to reach the target size investors may push for strategies riskier than you'd prefer It'd be interesting with examples :-) Could that be e.g. Neo4j bringing their Enterprise Edition closed source? Hoping to maximize revenue ... But risking that customers jump to an OSS alternative As long as the founder has voting majority, can't s/he just ignore the investors? What happens then? Hmm, maybe there'll be no C round?