4 ms·

Fundraising Stages

31 points by vinnyglennon 3y ago

elijahbenizzy 3y ago
Be careful about buyers posting the prices they wish to pay -- its a market, which always has a bid/ask. This seems reasonable, but I think they forgot to add the all-too-common outlier notion of "vibes", which drives many massive rounds these days.
gumby 3y ago
This crazy notation / division only makes sense for simple SaaS or simple mobile apps, with a likely best case of a quick flip/aquihire. If you're building a tech business (cough "deep tech") like life science, hardware, etc there's really no revenue MVP and the stages look more like they did in the old days. This sounds like a negative opinion (and I admit I am turned off by the default "all the world's a SaaS/app" assumption in most venture investing these days) but in truth I'm fascinated by the evolutionary pressure that has led to this. I am disappointed that the bulk of the industry has embraced "singles and bunts" rather than trying for homers, and that the huge cash at the other end (megafunds) has largely gone for the "with enough thrust [cash] you can get anything airborne" approach. But if I'm unhappy with that it's my problem.
- version_five 3y ago
  I think the "advice" industry focuses on SaaS because it's easier to give simple advice. I don't know that actual investment balance weights this way. In some sense, it's actually harder to start a startup because you're in a more competitive space as a pure SaaS app, no matter what the product, vs real "deep tech".
  - JumpCrisscross 3y ago
    > the "advice" industry focuses on SaaS because it's easier to give simple advice It's also replicable. Enterprise SaaS entrepreneurship is virtually industrialized.
tptacek 3y ago
Largest possible grain of salt on these threshold ARR numbers. People want stuff like this to be true more than it actually is true. What's probably pretty reliably the case is that if you're doing low-mid 7 figures ARR, your fundraising path is straightforward.
- jrpt 3y ago
  Yeah seriously, I know a lot of companies that raised seed rounds without $50k MRR. Here is someone's analysis of recent YC startup SAFEs: https://twitter.com/ajh3_/status/1653754713370927105 https://twitter.com/ajh3_/status/1653754713370927105 I doubt the majority of those companies have $50k MRR = $600k ARR but they're raising $2 million dollar rounds on average. Furthermore, I don't think they're necessarily overvalued. I think what just matters more at the early stage is the market they're going after, how their product fits into it, and the quality of the founders.
  - algo_trader 3y ago
    From the tweetstorm > We follow. We do not have valuation rules (clearly). > We prioritize 2nd time founders, rev traction, and fancy co-investors. So these valuations are for the best 10% of YC, which is the best accelerator. Nice if u can get it.
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- lmeyerov 3y ago
  yeah those numbers seem like they're from 2003 not 2023
steveBK123 3y ago
Why does it stop at Series A? As an east coast / not VC FAANG tech guy, I am unclear on all the different "series" that come later. What would one make of a company going Series E for example?
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mtoner23 3y ago
Funny how half the "rounds" in question, the goal is to raise money to impress the next round of investors. No focus on profit at any point is required for these companies. Crazy
- synergy20 3y ago
  fake it until you make it, some thinks it's a feature not a bug, which is why it's called _venture_ funding.
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mxstbr 3y ago
While I'd take the metrics they talk about with a big grain of salt (they heavily depend on the specific startup being evaluated), the round sizes are in the right ballpark. Our[0] actual round sizes were: 1. Pre-seed: $1M (led by System.One) 2. Seed: $4M (led by Boldstart) 3. Series A: $25M (led by Tiger Global) Note that all of these were all raised in 2021 & 2022 before the investment market crash, but even now I regularly see[1] rounds of similar sizes. [0]: https://stellate.co https://stellate.co [1]: https://mxstbr.com/investing https://mxstbr.com/investing
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31 points by vinnyglennon 3y ago

Be careful about buyers posting the prices they wish to pay -- its a market, which always has a bid/ask. This seems reasonable, but I think they forgot to add the all-too-common outlier notion of "vibes", which drives many massive rounds these days.

gumby 3y ago

This crazy notation / division only makes sense for simple SaaS or simple mobile apps, with a likely best case of a quick flip/aquihire. If you're building a tech business (cough "deep tech") like life science, hardware, etc there's really no revenue MVP and the stages look more like they did in the old days. This sounds like a negative opinion (and I admit I am turned off by the default "all the world's a SaaS/app" assumption in most venture investing these days) but in truth I'm fascinated by the evolutionary pressure that has led to this. I am disappointed that the bulk of the industry has embraced "singles and bunts" rather than trying for homers, and that the huge cash at the other end (megafunds) has largely gone for the "with enough thrust [cash] you can get anything airborne" approach. But if I'm unhappy with that it's my problem.

version_five 3y ago
I think the "advice" industry focuses on SaaS because it's easier to give simple advice. I don't know that actual investment balance weights this way. In some sense, it's actually harder to start a startup because you're in a more competitive space as a pure SaaS app, no matter what the product, vs real "deep tech".
- JumpCrisscross 3y ago
  > the "advice" industry focuses on SaaS because it's easier to give simple advice It's also replicable. Enterprise SaaS entrepreneurship is virtually industrialized.

tptacek 3y ago

Largest possible grain of salt on these threshold ARR numbers. People want stuff like this to be true more than it actually is true. What's probably pretty reliably the case is that if you're doing low-mid 7 figures ARR, your fundraising path is straightforward.

jrpt 3y ago
Yeah seriously, I know a lot of companies that raised seed rounds without $50k MRR. Here is someone's analysis of recent YC startup SAFEs: https://twitter.com/ajh3_/status/1653754713370927105 https://twitter.com/ajh3_/status/1653754713370927105 I doubt the majority of those companies have $50k MRR = $600k ARR but they're raising $2 million dollar rounds on average. Furthermore, I don't think they're necessarily overvalued. I think what just matters more at the early stage is the market they're going after, how their product fits into it, and the quality of the founders.
- algo_trader 3y ago
  From the tweetstorm > We follow. We do not have valuation rules (clearly). > We prioritize 2nd time founders, rev traction, and fancy co-investors. So these valuations are for the best 10% of YC, which is the best accelerator. Nice if u can get it.
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lmeyerov 3y ago
yeah those numbers seem like they're from 2003 not 2023

steveBK123 3y ago

Why does it stop at Series A? As an east coast / not VC FAANG tech guy, I am unclear on all the different "series" that come later. What would one make of a company going Series E for example?

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mtoner23 3y ago

Funny how half the "rounds" in question, the goal is to raise money to impress the next round of investors. No focus on profit at any point is required for these companies. Crazy

synergy20 3y ago
fake it until you make it, some thinks it's a feature not a bug, which is why it's called _venture_ funding.
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mxstbr 3y ago

While I'd take the metrics they talk about with a big grain of salt (they heavily depend on the specific startup being evaluated), the round sizes are in the right ballpark. Our[0] actual round sizes were: 1. Pre-seed: $1M (led by System.One) 2. Seed: $4M (led by Boldstart) 3. Series A: $25M (led by Tiger Global) Note that all of these were all raised in 2021 & 2022 before the investment market crash, but even now I regularly see[1] rounds of similar sizes. [0]: https://stellate.co https://stellate.co [1]: https://mxstbr.com/investing https://mxstbr.com/investing

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