Penis envy: why you too should raise a massive Series A
You’re running your business and you’re getting a product to market that users actually like, your cash-flow is not looking too shabby and you have a small but dedicated team, but that little voice in the back of your head keeps telling you you’re not a player, not yet, you don’t have that $10 million in the bank.
Well, let me tell you what a real founder would do in this situation : raise a boatload of cash from the best branded investor he / she can find. Here are great reasons why:
Get all the PandoDaily you can eat
Finally get the recognition you deserve with a huge funding announcement. Hang out at f.ounders, go evangelize, guest post weekly on Techcrunch. No more being ignored. Become a pundit. Leave it to all the other schmucks to beg their way to PR coverage.
Winter is coming
We’re in a bubble, right ? Who knows how much this funding bonanza will last, how long before the hapless VC’s run like lemmings in the other direction to lick their wounds, demonstrating once again their fundamental lack of appetite for risk. Better take as much as you can on the balance sheet right now, for who knows what will happen when the Wall gets breached ?
Be a playa
Your competitors have all raised $15M. Are you going to give them a run for their money and show what you’re made of, or sit by the wayside with your paltry balance sheet ? Focus on the KPI that counts: capital raised. We all know it won’t impact your behaviour to have all that money in the bank, don’t we ?
Do your VC a favour
They’ve got a $500M fund, and they need to put money to work. Indulge them. Be community minded and spare a thought for all that pressure to deploy they’re under. They’ll thank you for it.
Relax, don’t sweat it.
No more of all that “hire only when you’re hurting”. No more of that insane pressure to release and these crazily tight progress cycles. Relax fully into the post Series A balance sheet lull, as that $12M sitting in the bank looks like the impregnable moat that Warren Buffet lovers have been badgering you with. Let the burn run to $500K a month and hire awesome talent. Get a PA. Delay your launch by 6 months. Have a cocktail at lunch. Shoot for perfection and tell Eric Ries where he can stuff his lean UX. Chill, secure in the knowledge that you are burning other people’s money. Endless summer.
Relax, don’t run it.
Who needs control ? You’re way better off handing the reins over to someone else. Raise a ton of cash, make your VC happy by allowing to reach his lofty ownership target, give him all the controls he wants. You’ll soon be on the hot seat for your job, which will be an unpleasant but thankfully short period, than off the hot seat and on to the CEO search committee, and soon in a much comfortable position as a remunerated board member, chairman if you’re threatening enough. Now you too can play the VC: pontificate about what you would have done differently and hassle the new CEO about his talent management skills. No more of that lonely job of being at the top and bottling all that pressure up as you struggle to maintain your game face.
If you’re going to have a down round, make it count
Liquidation preferences and anti-dilution provisions are there for a reason. With enough capital in early, you can really make them count ! So if you stumble on your way to the B, make sure that VC associate has a chance to flex his Excel skills as he computes those extra shares he’s going to be issued and see how creative he gets with that carveout for the new management team. Who cares about ownership right ? Just focus on the upside, laddy.
Go big or go home
So there you have it. Be a player, show everyone what you can do. If you need $3M, raise $10M. If you need $10M, raise $20M.
What’s the worse that could happen ?
This entry was posted in Uncategorized. Bookmark the permalink.
10 Responses to Penis envy: why you too should raise a massive Series A
Pingback: 17 Sep 2012 | Flagon's Den