
The problem with taking seed money from big VCs - pclark
http://www.cdixon.org/?p=256
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dasil003
This seems so obvious and yet something I hadn't thought about until I read
the article.

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shafqat
We took seed money from one of the largest VC firms in the valley. We didnt
know they even did seed rounds, and this is not publicized. Additionally, they
invest as an angel syndicate, and don't use their official VC name. All of
this because they understand the problem entrepreneurs face with taking seed
money from big VCs. The fact that they've thought this through from the
entrepreneurs point was a huge plus factor for us.

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adrianwaj
So that's the downside: the Big VC will make a Series A harder _if they are
the first to reject you_ when shopping for that Series A.

Solution: don't approach the seed VC for a follow-on, skip it or postpone it
until last resort, in which case the new alternatives can used as 'Stalking
Horses' on the seed VC anyway if playing hardball.

Big VC seed money is a good endorsement and help for a company, and the upside
is the chance of an easy follow-on from them because they have the pockets:
but wait for them to come calling first, or have some Stalking Horses ready if
you sense being played. Otherwise just skip them altogether on a Series A.

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radley
This argument doesn't play... All investments have similar if not equal
concerns: is your current investor going to re-invest? Might potential rivals
instead collude in their offer?

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smanek
If I take $100K from an angel no one is going to wonder why the angel isn't
putting in $2Mil in the next round - angels just don't handle deals that big.

If I take $100K from a VC and that VC opts not to put in another $2Mil,
everyone will wonder what the VC saw that made them not want to invest.

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trapper
Haven't you got bigger worries if someone who invested in you once won't
invest again?

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alanthonyc
You're missing the point of the article. It's that the seed VC will
essentially have control of the _appearance_ of your startup's chances for
success.

If they don't reinvest (for whatever reason, _even if your company is in good
shape_ ), you will look bad. If they do reinvest, they won't be doing so at
fair value.

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trapper
Good point, you're right, I missed it.

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Rexxar
On the other hand, if this strategy is widely known. People won't look any
more if they invest again or not.

