Both Sides of the Table
JUNE 5, 2011
Another firm we saw tried to raise $15 million at a $60 million pre-money with similar metrics. They did an inside round, spent a bunch of money and then went through a fire sale of the business less than 2 years later. But he sold within 3 years for not a huge price after having raised more than $20 million. Here’s the problem.
Both Sides of the Table
SEPTEMBER 27, 2010
If you do a $1 million angel round at $6 million pre-money and hope to do a Series A round for $2-3 million that’s fine as long as you’re doing awesome against your metric goals and the market continues to be frothy. If either condition doesn’t hold it will be hard to do anything but a flat or down round.
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Growthink Blog
MAY 23, 2011
Yes, you heard me right – multiple research studies, including from the Kauffman Foundation , have shown that when you remove a follow-on venture capital round from a founder or angel investor-funded company, that expected returns skyrocket. It is driven by the following: • The Best Metric for the Health of a Company is Cash Flow.
This is going to be BIG.
SEPTEMBER 7, 2012
There are a lot of people that artificially group together performance metrics for venture, and try to extrapolate successful stratagies from it. Here are the top things I hear about follow ons and why they don't make a lot of sense to me: 1) You need to have follow on capital to protect your investments in case of a down round.
Feld Thoughts
APRIL 21, 2016
Also, they have a strong belief that any sign of weakness (such as a down round) will have a catastrophic impact on their culture, hiring process, and ability to retain employees. Their own ego is also a factor – will a down round signal weakness?
NZ Entrepreneur
JULY 8, 2019
The situation I see time and again is an over-valuation on a markedly smaller-than-anticipated business, revenue numbers not achieved, and then needing to do another raise on a lower valuation (a ‘down-round’). A simple metric – when I registered my first company in 2004, the naming space was wide open.
David Teten
AUGUST 7, 2019
Likely signs of a Value investment: the company has challenges in filling out the round; the investors have more negotiating leverage than the founders during the closing process; the company has significantly better metrics (e.g. You could argue that when they were [raising] oversubscribed [VC rounds], Facebook, Google, Amazon, etc.,
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