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Only a small percentage of tech companies raise a series A or beyond. To me, this just seems like a capital-efficient alternative to the founder increasing the
by rytill 2y ago
Only a small percentage of tech companies raise a series A or beyond.
To me, this just seems like a capital-efficient alternative to the founder increasing their salary that could be negotiated. I had no such perception that this was some “secret” thing, I assumed it happened since you can do whatever you want if the investors and founders agree that it makes sense.
- adastra22 2y agoThis whole thread is leaving me very confused. Series A is the first priced round. You're saying only a small percentage of tech companies raise a priced round?
- mtremsal 2y agoA significant portion of startups that raise a Seed round (or equivalent) never get to a Series A. Maybe 30 to 50% fail at this stage.
- adastra22 2y agoAre we talking about just YC-style internet/app startups? Two of my startups have been deep tech where you can't do shit without a Series A, and the third was crypto in the start of that boom where VCs were begging to lead your Series A. So maybe I just work in a vastly different field.
- quartesixte 2y agoYeah deep-tech (which I am also in) plays on a different scale when it comes to funding rounds, simply because of how expensive hardware is and how big the headcount gets to just make MVPs. My friends in software startups balk at the sheer burn rate and funding rounds at mine. $100mm for a Series A is unheard of in software. Thank you Thiel for setting the bar so high (the famous, "you need $1billion in total capital to successfully pull off hardware startups" quote).
- mtremsal 2y ago> $100mm for a Series A is unheard of in software. Peak 2020: https://www.wiz.io/blog/wiz-comes-out-of-stealth-with-100m-series-a-funding-to-reinvent-cloud-security https://www.wiz.io/blog/wiz-comes-out-of-stealth-with-100m-s...
- throwaway2037 2y agoWhat is "deep tech"? Like, not a CRUD web app? Hardware? AI/ML?
- adastra22 2y agoFusion, fabs, manufacturing, defense, etc.
- rytill 2y agoAs you noted below, it depends on the industry. But for software, and my impression is that it is even more like this in most other industries, a huge amount of tech ventures never receive any funding. Many of these are never even properly incorporated and may not be included in datasets. Then, for the ones that do raise seed money, usually with SAFEs, 50-60% of them would fail before raising a significant priced round (series A). The overall point being, there’s a lot of risk between starting a company and raising a sizeable priced round for most people.
- DandyDev 2y agoThe company I work for raised a $1M pre-seed round, $10M seed and $25M series A I imagine other companies went through a similar scenario but failed before series A
- cbsmith 2y agoIt is a bit funny how founders get the special access at a lot of companies. Not all places work like that, but it seems disingenuous.