Jenny Fielding recently mentioned that a lot of startups are raising up to five rounds before a Series A and it made my heart sick.
This post from one of her colleagues at Everywhere Ventures (The Fund) implies why. it’s a wonderful piece that speaks to the interplay between runway, money raised and valuation. It’s an absolute must read.
TL;DR: the more runway you give yourself, the less likely you are to need a Pre-Seed 2 / Seed 2 / Bridge Round somewhere in there. If you can raise a $2M Pre-Seed at $10M (one-time 20% dilution), that’s wayyyy better than raising $500k on $5M, then another $500k on $5M, then $1M on $7M (at least 35% dilution).
Raise as much as you can within reason. A $2M Pre-Sees (let alone $3M) seems very West Coast to me, but if you can be capital efficient and give yourself 30 months of runway to figure out your business, you and your investors both win.
#startups #venturecapital #funding #happythanksgiving