
To raise or not to raise - nreece
http://stu.mp/2012/02/to-raise-or-not-to-raise.html
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tworats
As a bit of background, Joe was founder of SimpleGeo, which raised $9.81M and
was sold for $3.5M (according to TechCrunch). They were doing great stuff, but
I kept wondering how they were going to generate enough value to justify a
$10M raise quickly enough to satisfy the VCs...

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asanwal
One reason not in this post which may influence the decision to raise is how
fast the industry you are in is moving. If it's a fast-growing, fast-paced
industry with lots of competitors raising big warchests, raising money may be
required to give you resources to sell, scale and generally keep up with the
Jones'es. If you're industry is not as quick, competitive, etc, fundraising
might not be as requisite.

Not the only dimension but an important one.

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mistercow
> There are, of course, merits to both camps’ arguments, but, as with all
> things, reality tends to live somewhere in the middle.

This fallacy is called "argument to moderation".

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mahmud
OT, but I clicked that link expecting a discussion of exception handling ..

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ScottBurson
I thought it would be about poker.

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sudonim
Really timely article for for us. Don't raise means bootstrapping and maybe
taking on some consulting work for 3-6 mths before reevaluating. Raising means
hiring 2 more people and stepping on the gas. We are definitely at a point
where we've validated the concept but the beta isn't available yet. If raising
is easy, it would be a great accelerant. If raising is not easy, trying to
raise may delay or even prevent us from reaching our goals.

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bri3d
"...You’ve built a successful business, which you have no interest in selling,
and would like to extract some liquidity..."

Why would a VC put money into a company in this situation?

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neodude
The company is doing great, has a solid growth strategy and headed for an IPO.
Why wouldn't you invest in a company like that?

Not all VCs are early-stage, high-risk investors.

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bri3d
"Headed into an IPO" says "interest in selling" to me - it's a relative rarity
to IPO a company while still maintaining a personal controlling interest. I
guess it's just a difference in semantics.

(updated to clarify that I meant a personal controlling interest)

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true_religion
Don't the founders of Google maintain a controlling interest in the company,
even now so many years after IPO?

I think a common tactic is to sell preferred non-voting stock during IPO, and
retain voting stock for the founders. They get to keep control of the company,
in exchange for standing last in line during a possible liquidation.

~~~
bri3d
Google maintain a controlling interest, but the founders themselves don't. I
believe at IPO the founders controlled about 37.6% of the votes in Google and
the board controlled 61.4%. So Google still got to direct Google (rather than
their public investors), but the founders personally could be overrun by the
board.

Facebook is one of the very few companies I can think of which is IPOing with
a personal controlling interest from a founder.

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kurtvarner
The decision to raise capital should be an intuitive one for entrepreneurs.
Most founders know if they're going to need funding to ultimately reach a
level of success.

That being said, there are still some good points here. It can't hurt to make
sure you're examining your needs from both sides.

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karamazov
This statement doesn't make a lot of sense to me - even if it's "intuitive",
there should still be objective criteria one can use to reason out whether or
not raising money is a good idea. In fact, I would hope that most people
wouldn't just follow their gut on such an important decision - even if the
answer seems obvious, something like fundraising is worth investigating
closely and carefully.

Moreover, there are definitely some situations where people will be unsure
what to do; and in those cases, knowing that the decisions "should" be
intuitive is of no help whatsoever.

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ScottBurson
_In fact, I would hope that most people wouldn't just follow their gut on such
an important decision - even if the answer seems obvious, something like
fundraising is worth investigating closely and carefully._

False dichotomy. These things are not mutually exclusive. Absolutely, you
should investigate closely and carefully; but the final decision will come
from your gut. It has to, because it's ultimately a question of what kind of
company you _want_ to build.

