Read on Twitter
So because I have 20 mins and all my threads take 20-ish mins to write, here's some thoughts on "Skipping a Round"
to preserve equity for founders..
/Thread
to preserve equity for founders..
/Thread
Pre Product Market Fit, is when the MOST dilution occurs on a cap table - ideally pre Series B. You're learning your CAC, LTV, focused on channels, trying experiments, building your team etc..
But if you can hit PMF and "SKIP a ROUND" like @jasonlk says...
But if you can hit PMF and "SKIP a ROUND" like @jasonlk says...
You can avoid a TON of dilution.
To Lemkin's last point, where you'd give up on growth, today's markets is less "unilateral"
In a "winner takes most" world, multiple winners worth >$20-50B mean its easier to envision a world in which No 2 does not get a set of steak knives.
To Lemkin's last point, where you'd give up on growth, today's markets is less "unilateral"
In a "winner takes most" world, multiple winners worth >$20-50B mean its easier to envision a world in which No 2 does not get a set of steak knives.
So in the modern world where Indie VC and Earnest Capital incentivize cashflow and VCs incentivize rocketship growth, What does it mean for a founder to have massive growth ambitions but also preserve dilution.
You can find the answers in $ABNB and $DASH cap tables.
You can find the answers in $ABNB and $DASH cap tables.
$ABNB went from a $2.5M val to a $70M val to a $1.12B val.
In today's terms they went from:
Angel $20k ($333k)
Pre-Seed $615k ($2.5M)
Ser A $7.2M ($70M)
Ser C $112M ($1.12B)
Result: Founders owned ~43% at IPO
In today's terms they went from:
Angel $20k ($333k)
Pre-Seed $615k ($2.5M)
Ser A $7.2M ($70M)
Ser C $112M ($1.12B)
Result: Founders owned ~43% at IPO
whereas $DASH did *ALL* the rounds..
YC $20k ($333k)
Angel $100k ($1.5M)
Seed $2.4M ($7.5M)
Ser A $17.3M ($80M)
Ser B $40M ($560M)
Ser C $127M ($750M)
Ser D $535M ($3B)
Result: Founders owned ~12% at IPO
YC $20k ($333k)
Angel $100k ($1.5M)
Seed $2.4M ($7.5M)
Ser A $17.3M ($80M)
Ser B $40M ($560M)
Ser C $127M ($750M)
Ser D $535M ($3B)
Result: Founders owned ~12% at IPO
So how do you "skip a round"?
- You find Product Market Fit by stretching your earliest raise dollars
- You scrounge and stay lean till your flywheel is working
- You use alternate methods to finance your cashflow.
- You maniacally focus on revenue efficiency and lean growth.
- You find Product Market Fit by stretching your earliest raise dollars
- You scrounge and stay lean till your flywheel is working
- You use alternate methods to finance your cashflow.
- You maniacally focus on revenue efficiency and lean growth.
Once you find that lever that scales, and you have tested it well, You need to raise $$$ that helps you test that lever at scale.
I.E. a marketing channel that works at $2000 / mo also works at $200,000 / mo
I.E. Adding products / services that increase ACV without increasing CAC
I.E. a marketing channel that works at $2000 / mo also works at $200,000 / mo
I.E. Adding products / services that increase ACV without increasing CAC
To do this, you'll often have to take 18-24 months of PAIN.
Undiluted, self-inflicted PAIN. No easy roads, no $$$ to spend, no cash to make errors on.
But you emerge leaner, stronger, and wiser.
And then you control your destiny much better.
Undiluted, self-inflicted PAIN. No easy roads, no $$$ to spend, no cash to make errors on.
But you emerge leaner, stronger, and wiser.
And then you control your destiny much better.
Sometimes the difference between owning 20% and 5% is just 12 months of growing lean and learning more.
/fin
/fin
