The amount of dilution early-stage startups now take (to be fair, for lots of capital) feels like malpractice on the part of investors. Founders don't understand how much it hurts them to have sold >50% of the company after their pre-pre-seed, pre-seed, seed, and A.
If the valuation is set by the market, that implies the solution is to raise less. Which I believe. Investors often encourage startups to take too much money. And that doesn't just dilute the founders, but also damages the company.
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Warps incentives to be too short term? Dilutes singular vision along with ownership stakes?
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Most VCs seem to be flexible about valuation but rigid about min ownership/stake - how do you navigate in such cases?
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Raise from other VCs.
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Too much money? I dunno, doesn't add up with SoftBank buying billions in call options on BigTech
https://www.cnbc.com/2020/09/04/softbank-reportedly-the-nasdaq-whale-that-bought-billions-in-options.html …Thanks. Twitter will use this to make your timeline better. UndoUndo
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*assuming* that founders are motivated by the desire to mitigate uncertainty of timely raising next round, maybe focus on addressing that uncertainty
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~0 VCs know how or try to invest outside of an extremely narrow financial model. Of course, if they invested in the sort of people that were not so keen to dilute themselves, they would find their stake diluted less in the long run. But they'd need skin in the game to do that.
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Deploying less money at the same valuation is not a good approach when the game being played is get the best pump for more fees within 3 years. Good shtick if you can get it, but it would be nice if there were a few more earnest technologists in tech.
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Exactly because it increase the “need” to spend and makes you less creative.
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I think amounts raised are a function of funds becoming too large rather than anything else. The cost to launch has gone down in the past decade, not up, in most cases.
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How are your we work shares doing?
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