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Indeed, signalling concerns apply to every round, but perhaps they are more important for the seed-to-A transition than for later rounds. It seems that most co
by teuobk 15y ago
Indeed, signalling concerns apply to every round, but perhaps they are more important for the seed-to-A transition than for later rounds.
It seems that most companies that raise a seed round (and survive) go on to raise a series A before an exit, but many companies that raise a series A can get to an exit without raising subsequent rounds. (Admittedly, I don't have solid numbers; this is just based on casual observation) Thus, future signalling worries could be less important during the A round if you aren't as concerned about ever having a B round.
- eladgil 15y agoAgreed - the transition is really seed to series A. By the time you hit series B or C, you have investors who own a large part of your company already (and in most cases won't do an "inside round" - or if they want to do it, the entrepreneur does not). So the dynamic post-series A becomes the VC helping you more in raising a B, but not competing for the series B. Since they are not competing to lead your B (they just pro rata), there is no signal (unless they do not want to pro rata, which is a very large negative signal).