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Can someone who knows the VC industry explain why having 10 years runway would be considered good? Aren't these companies supposed to be deploying capital as qu
by version_five 3y ago
Can someone who knows the VC industry explain why having 10 years runway would be considered good? Aren't these companies supposed to be deploying capital as quickly as possible, not banking it. If a ceo said they needed your money 5+ years from now, wouldn't you wait until then to commit?
- echelon 3y ago> If a ceo said they needed your money 5+ years from now, wouldn't you wait until then to commit? Why would a CEO give up equity if they don't need the capital? Wouldn't they prefer not to sell big chunks of flesh? If he's not deploying it now, maybe the CEO is predicting rough times ahead and wants to de-risk for future cash flow or fundraising turbulence? Isn't that, too, a kind of negative signal? Or is this all prudent?
- hustwindmaple1 3y agoThere are times when capital is cheap and abundant and there are times capital is scarce and hard to come by
- jasonwatkinspdx 3y agoFOMO is a thing among VCs. You may not be let in the round 5 years from now, or the price may be less favorable, etc.
- stevofolife 3y agoSomeone who knows the VC industry should chime in on this - but AFAIK, companies don't get all their money from investor at once.
- fulladder 3y agoNo, you typically get all the money wired into your bank account immediately after the deal closes. It's possible to structure a deal where the company has to reach a series of milestones to unlock each additional tranche of funding, but this is less common.
- ZephyrBlu 3y agoCurrently 10 years of runway. I wouldn't expect them to maintain that for a significant period of time.