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"Resist the urge to raise and spend too much money. The track record of companies that raise $30MM or more in their first round is bad." Q: Is the track recor
by webwright 12y ago
"Resist the urge to raise and spend too much money. The track record of companies that raise $30MM or more in their first round is bad."
Q: Is the track record bad, or do they just fail louder than the ocean of companies that raise small amounts of $ and then quietly die? It'd be interesting if someone could prove that a large raise actually hurts your chances, but for a disciplined/veteran founder (who would raise a lot but spend it thoughtfully rather than recklessly), it seems like it shouldn't.
Edit: http://www.alleywatch.com/2014/02/the-10-biggest-series-a-rounds-of-all-time/ http://www.alleywatch.com/2014/02/the-10-biggest-series-a-ro... - "All of the companies are still operational in some capacity."
- rqebmm 12y agoIt may also be related to the fact that the get-big-quick scheme is inherently risky in order to return the necessary rewards. If you're raising a ton of money you have to be a home run, and that means you may pass on moderately profitable opportunities in order to keep looking for insanely profitable ones.
- webwright 12y agoIf you're raising ANY institutional money, the expectation is trying for a home run (though most expect the process to take 7+ years).
- rqebmm 12y agosure, but if you haven't taken a ton of money, you have the opportunity at some point to take a strategy that turns a small, steady profit now instead of being continually forced to doubling down on being the Next Big Thing
- prostoalex 12y agoGood luck aligning those goals with investors'. Most of them signed up for the Next Big Thing, if they wanted a small steady profit, they would've bought a condo and rented it out.
- asanwal 12y agoYour point about fail louder is probably right. We dug into data after Sam made this statement and the data suggests there is not much of a relationship b/w initial funding and successful outcomes. Data here -- http://www.cbinsights.com/blog/funding-round-exit-valuation-relationship http://www.cbinsights.com/blog/funding-round-exit-valuation-...