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> We hear of a startup’s first funding round, the follow on, the next one, and one more. ... On occasion, we hear underdog stories of startups that bootstrapped
by gumby 3y ago
> We hear of a startup’s first funding round, the follow on, the next one, and one more. ... On occasion, we hear underdog stories of startups that bootstrapped to notable success, with zero funding rounds and little pomp and circumstance.
This is a side point but I have always wondered why companies publicize their funding rounds and why anybody outside the company would care? Well apart from the parasites who use those announcements as an acuse to cold call the CEO about mobile phone service, accounting software, and whatever.
Announcing important milestones (key customers, important new features, etc) makes sense. Raising money is just part of making those milestones and to me makes about as much sense as announcing a git push.
- brigadier132 3y ago> why companies publicize their funding rounds and why anybody outside the company would care? Current and potential employees care.
- albroland 3y agoCustomers too, Especially B2B. If you're buying something from an early stage startup (service or product) you want to believe that they'll be around in a couple years so you haven't wasted the time/effort of onboarding or using the product.
- voakbasda 3y agoFinancing is a signal that the investors believe in the mission/product/services. It's just another a form of peacocking; the display serves as a proxy for more direct measurements of fitness.
- w10-1 3y agoPublicizing money raises has (at least) two effects: (1) It is a warning to competitors not to enter the market unless they're willing to put up a similar amount (all things being equal). (2) It validates the valuation, which ultimately sets the bar for the next round or IPO. Note that a company (with majority investors) will be wound up as soon as the prospects look bleak, even if there is plenty of money available. So in a financial environment with few alternatives (i.e., low interest rates), it makes sense to park your money as a threat to competitors, so long as the run rate roughly tracks the residual value increase in a fire sale.
- Ekaros 3y agoI wonder if it is just in general market pumping up valuations. If everyone is highly valuing all companies, it means all companies are more valuable. Thus when they are flipped everyone makes more money. So it makes sense for everyone to push up valuation number as anything they have stakes in will also seem more valuable...