[HN Gopher] Raising money is less stressful than bootstrapping
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Raising money is less stressful than bootstrapping
Author : AnhTho_FR
Score : 28 points
Date : 2022-12-12 08:59 UTC (14 hours ago)
(HTM) web link (posthog.com)
(TXT) w3m dump (posthog.com)
| fairity wrote:
| > Our board could pressure us to take certain decisions, but Tim
| (co-founder) and I are ultimately in control.
|
| Congrats on maintaining board control after two rounds - that's
| rare. However, you're probably misguided if you think you
| ultimately have control in all scenarios.
|
| In the vast majority of VC deals, the VC gets veto power over
| acquisitions and buyout offers, regardless of board control. VC's
| have a fiduciary duty to their LP's to maximize returns. So, if
| you find yourself in a situation where you receive an acquisition
| offer that is clearly sub-optimal for your VC's (albeit life
| changing for yourself and other team members), you will likely be
| out of luck.
|
| This, in my opinion, is the largest downside of raising at an
| inflated valuation (not the commonly quoted reason of making the
| next round harder to raise).
| dustingetz wrote:
| see "Series A Exit Clause" -
| https://startupjuncture.com/2017/05/16/vc-deal-terms-explain...
| CodesInChaos wrote:
| Looks like they raised their Series B only 1.5 years ago. Let's
| see how they see things 5-10 years down the road.
|
| * It's not clear if they'll be able to raise another round
| without losing control. What do you plan to do if you run out of
| your current money without being profitable yet?
|
| * "investors want growth" isn't a problem as long as you're
| growing quickly, which posthog probably does at the moment. But
| once growths slows you'll probably get to know that side of them.
|
| * If you raise money at a higher valuation, the required exit
| size grows proportionally. Once it becomes apparent that you're
| not on track to reach the target size investors may push for
| strategies riskier than you'd prefer.
| akerl_ wrote:
| > Our board could pressure us to take certain decisions, but Tim
| (co-founder) and I are ultimately in control - after our series
| B, we've got control of three out of five seats. Control is
| something we can negotiate each time we fundraise.
|
| So after the series B, you're already down to 60% control with
| your investors holding 40%... sounds like this isn't a myth.
| raiyu wrote:
| You may have 3 out of 5 board votes, but unless you have
| complete control and full voting control they usually have
| carve outs like approving any change of control (aka selling
| the company).
|
| You may receive a buy-out offer you find very interesting but
| your board is against it and then you find out very quickly how
| much control you actually gave up and how aligned you really
| were.
| thenerdhead wrote:
| I'm genuinely curious on this dilemma. I feel like I've read
| plenty of success stories on both sides. Yet I still see more
| bootstrapped founders coming out on top in terms of take-home pay
| unless a VC-backed company exits or becomes a unicorn.
|
| I actually see a fair amount of VC-backed founders who have
| unsuccessful companies pivot into seed investing with other
| people's money. So they still "win" per-say.
|
| There's probably someone out there who wrote a blog with the
| opposite premise and they are both relative.
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