I'm an investor. I've talked to a number of companies that have done this, and it seems to work. However, I think the amount you're raising matters.
If you're raising 500k or 700k, then cutting that in half will make investors wonder why you're raising so little. There's not much runway that you can buy for $250k.
On the other hand, let's say you're raising $1.5m at a $6m valuation. You can start by telling people you're raising 750k or 900k. Once you get to, say, 500k, investors will feel pressured to invest if you only have 250k left to go; they won't feel pressured if you have 1m left. Furthermore, if you're struggling to get to 750k, you can stop when you're there/almost there, and not look bad for hoping to raise 1.5m and then quitting. On the other hand, if you get to 750k quickly, you can use that momentum to get to 1.5m and look great doing it ("Wow, she only wanted to raise 750k, but she had so much interest that she ended up taking 1.5m!").
It's kind of silly that this works, but it does seem to work.
I get this to an extent, but it also borders on being dishonest when you're cutting the amount in half and honestly if you're setting out to raise 1.5 but you have a hard time getting to half of that chances are you're raising too early.
I don't mean "too early" in the sense of the VC who met with you for five minutes said it was "too early" since that is a whole different story.
I mean too early in the sense that you probably don't have enough actual traction yet, which can mean users, technology, or any subset of other things that matter to show your company has significant growth potential.
We thought we would start raising a few months ago and we were definitely too early, we thought we could raise based on being smart and a track record, took a couple of meetings and realized that we needed to put our heads down and get back to work for a bit.
Fast forward a few months later and we have lots of inbound, some great outbound leads (I agree with this article in the was that you probably HAVE to ask for some inbound leads unless you're the hottest deal in the valley, all the best fit investors probably won't come knocking for you) and it looks like our round will be able to oversubscribe rather quickly.
That's a product of traction(hello revenue!) and picking the right time to raise.
While I appreciate Leo's sentiment here, personally I think if you're looking to raise 1.5 and you struggle to get to 750, put your head down and get back to work or else you're going to make the next few years of your life really hard.
Presumably you wanted to raise 1.5 because you have a budget, or a runway goal(at least I hope you do) so raising half of that will likely end up with investors wishing they would have passed on the deal, and that's not a win for anyone!
That's a great point. I agree that it's dishonest if you're just changing the price to put pressure on investors. I do think that if you have an aggressive growth plan that requires 1.5m, but you can come up with a less aggressive plan where 750k is enough, then that lets you ask for 750k while hoping for 1.5m and keeping your integrity.
I also agree fully that more traction/progress/revenue is very helpful to raising more money and raising it more quickly.
Aggressive vs non-aggressive growth plan definitely makes sense there, definitely a better way to define that.
If there is a way you feel you can still significantly grow your business with a less aggressive plan then that's great, I think what happens too often is Entrepreneurs settle for what they "can get" and end up tanking a company that never had a chance from day one because there was not enough money in the bank to allow time for significant traction outside of a fluke event.
We want to encourage a group of Entrepreneurs who are honest and upfront. In turn we'll hopefully get VC's that are that way as well ;)
"Once money is no longer your biggest problem, hiring is."
Very true. After moving to the investment side a little while ago, I've seen firsthand that when founders are not stressed out about fundraising, they're stressed out about hiring. If I was to categorize requests that our portfolio companies have made of us, the breakdown would be something like:
* 50% help with hiring
* 20% introduction requests
* 15% requests for product feedback
* 15% miscellaneous (technical reviews, sitting down and discussing long-term strategy, etc.)
Planes don't really fall out of the sky either, especially modern commercial jets with high L/D ratios. There are some exceptions, e.g. fighter jets, but generally planes can glide down safely upon engine failure provided there is a nearby spot to land.
We're talking general aviation here. Small private planes crash frequently.
I live around Albany, NY. In the past 18 months, there have been at least 4 fatal crashes that I can recall as a casual newspaper reader. Usually it's related to tired/inexperienced pilots combined with some other factor (mechanical, weather, etc).
One that I remember as a kid growing up in farm country was a guy who had an engine failure. Like you said, he didn't just fall out of the sky... he tried to glide into a field, and just missed it. Wing clipped a tree.
True, but it takes around 45 minutes to prepare a plane for flight and about 20 minutes to put it away. Also, you have to drive to and from the airport. Planes are incredible, but you have to fly pretty far before they're a timesaver.
Where did those numbers come from? Preflight and run-up can be done in 20 minutes once you've done it many times and securing after a flight is as simple as turning everything off and pushing the plane in the hanger or parking on the pad. That's maybe 10 minutes at most.
The only really time consuming part would be making and filing a flight plan. If you've done the route multiple times, you already have the flight plan and if you're operating under VFR (visual flight rules), you don't need to open/close it.
Source: I'm currently a student pilot and have done this process many times.
My parents are both pilots. The numbers are just my estimates from having flown with them a bunch. Maybe my numbers are a little high, but I think I'd stand by them.
There's always a bunch of dealing with cranking open the hanger door with the winch, dragging the plane out, checking that there is no water in the fuel (both tanks), transferring the stuff you're bringing with you from the car to the plane, getting into the seatbelt, plugging in the headsets and checking that they're all working, talking to the tower, taxiing out to the runway, waiting for a plane or two to take off, and then actually taking off.
Yeah, where I am, it's about 5/3 as expensive. The upper bound improvement factor you can get over driving due to flying in a straight line is 2/sqrt(2), so your best case cost-equivalent efficiency is about 11 mpg.
The upper bound is infinite if you fly a route with no road equivalent, for example to an island. Even sticking to a single landmass, you can get arbitrarily high, as roads can be extremely indirect in some cases.
This is why I'm excited about electric airplanes and driverless cars. A GA electric airplane has about 1/10th the energy cost of an avgas one. The cost of avgas is what discourages me from owning an airplane.
In most cases, avgas will be under half your total expenses for the year. You have to fly well over the average utilization for gas to dominate over maintenance, insurance, hangar, database updates/charts, etc.
Even at 100 flight hours/year in a thirsty airplane, you'll spend maybe $10K on fuel. It would take a very simple airplane, hangared very cheaply, and no abnormal maintenance events for the year, for those other costs to be under $10K.
Few privately owned planes fly even 100 hours per year, and most of the non-fuel costs are largely fixed, meaning you pay them all just to fly the "first hour" and then subsequent hours just cost fuel and a small wear-related maintenance allocation.
Airplanes are cheap to buy, but not cheap to fly. The cost of gas hurts, but doesn't dominate in my experience (owning three airplanes over 15 years, and flying my family on most of our domestic travel east of the Mississippi).
You're not taking into account the vastly simpler design of an electric aircraft. An electrically propelled aircraft will have maintenance requirements similar to a glider. Fewer engine overhauls and much simpler procedures means significantly reduced cost.
I don't think you're taking into account the vastly increased battery maintenance, inspection and capacity testing that will be required.
Yes, you'll save a lot on not maintaining a piston IC engine.
You'll give some of that back in inspection processes to ensure that you don't have 95% of the range that you think you have. If you run of out power in a Leaf or a Tesla, it's overwhelmingly likely that the car will come to rest on a piece of pavement and intact. If you run out of juice in an electric airplane, you turn into a glider, and it's far from assured that you'll end up at an airport or on pavement.
I'm not scare-mongering, but that's the point of view the FAA will take on inspection and testing requirements for electric storage systems to achieve equivalent level of safety.
I know when I add 40 gallons into my left tank (beyond the unusable fuel) that I have added 40 gallons of range. I need some similar assurance for battery capacity. (again, it's not me, but the FAA.)
Just have a look at the annual inspection requirements for ELT and starting batteries for piston airplanes. And those are not propulsion systems. The batteries that run the AHRS in the G1000 and Aspen systems are also onerous and those batteries are crazy expensive relative to their capacity.
I can see electrics working for flight school airplanes, especially if they can get the 80% recharge time down under 2 hours.
I don't see them as practical for cross-country travel anytime soon without advances in battery tech; those are inevitable, but I don't see them displacing liquid organic fuels in my flying career for 1000nm legs.
I would think inspecting & maintaining the actual capacity of the battery would be part of the automated charging system. It would be recorded to a fine a amount of detail. Most airplanes have a more predictable energy consumption model than a typical consumer car also, and since the typical pilot is more sophisticated, can afford to show a more complicated energy display for more accurate energy consumption and range assumptions.
Electric aircraft currently would be very useful for people who live on an island or island cluster or want to do frequent short hop flights. For example Hawaii, the Caribbean, Indonesia, the Philippines, Seattle and the near by gulf islands, etc. I can take a ferry boat for 3 hours at scheduled times or I can hop on my plane for 30 minutes at any practical time at the same cost really changes things for island dwellers. I could live on an island and theoretically commute to work every day for 45minutes of total travel time. Going to Tahoe every weekend wont be a big deal, etc.
It would be also useful for future automated air taxis, since the energy costs would soon dwarf the cost of everything else in those situations.
If it were my ass up in the air, I think I would prefer that the electric power to the drive motor(s) be provided by a very reliable Diesel-cycle or external combustion generator and not just a battery pack, at least with our current generation of battery technologies. #2 fuel oil is far more energy-dense than any battery that I can afford.
As far as I know, the major difference between Jet-A and #2 is that is has a much lower gel point than even the northern winter diesel fuels, because higher = colder. If you already have electric motors, wouldn't electrically heated fuel tanks suddenly be more possible than trying to divert waste heat out of fuel-burning engines?
You could save a LOT of money on fuel if you could use off-road #2 oil instead of Jet-A.
Dry adiabatic lapse rate is approximately 3C per 1000'. I regularly fly at high VFR altitudes or low flight levels in my private (gas, piston IC) airplane.
Even confining yourself to 15K feet, you'd be ~45C or 81F lower than the sea-level temp (assuming the air was totally dry, so maybe call it 35C or 63*F). The wings are extremely effective radiators, and wet wing tanks have fuel right against the outer wing surface.
So, you're going to need to dump an enormous amount of energy into the fuel to keep it heated and non-gelled, which is why we have Jet-A, and in fact many jets need to add Prist anti-icing agent, and even some high-flying piston engine airplanes run their avgas through oil-to-fuel heat exchangers.
So, even if you're going to fly your diesel engine (or diesel generator) airplane in the mid-teens, you're probably still going to want to use Jet-A, both for its superior anti-gel properties but also because of the supply chain dedicated to getting Jet-A to a great many airports where you'd want to operate from.
I think it's interesting that there are ~200k Twitter/Facebook shares at the time of this comment, but less than 10k calls/emails. The message seems to be, "I think contacting legislators is a great idea! I hope some of my friends do that.."
True, but as congresspeople are elected by the people of the US they would only be keen on hearing from them (well, that's the idea at least - in reality they don't seem to worry a lot about what a small but informed contingent cares about)
There's an interesting philosophical question here: what is the difference between seeing something in person, or watching it from inside your stateroom on a retina screen that mimics exactly what you would see if you were outside?
I agree with you that seeing things on the TV screen seems much less meaningful, but I have a hard time explaining why.
I don't know anything about the history of CSS's design, but I'm perpetually amazed that positioning (and specifically centering) requires so much CSS magic. I would think CSS positioning would be a one-liner, but instead it's a collection of context-dependent, browser-dependent recipes. I wonder if there's a good reason for the madness, or if it's just poor design. (FWIW, I'm a backend engineer and have only dabbled with front-end code.)
The thing that boggles my mind is that we're over ten years and three major versions in and we can't center stuff reliably or conveniently, images won't scale up to fit (only down...), multi-column text is barely implemented and Google is ripping it out, the box model is borked by default, it's non-trivial to determine the layering of UI elements, and so on.
All of which were solved problems before the web was born.
The browser your employer ships only currently has partial support for flex box. Why do Mozilla employees insist on being misleading about Firefox's standards support? Flex box is not ready for mainstream use. Not just because of 'old browsers', because of your current browser.
You're completely missing the point. Having elaborate workarounds for utterly common problems that have all kinds of edge cases is exactly where we were with button rollovers in 2005.
All the W3C had to do for CSS2 was look at Mac App or Cocoa or any other decent GUI framework and figure out what needed to be added to make all that stuff work simply. Instead we get ridiculous crap that sort of half solves the problem if you do it in just the right way and apply a couple of rolls of duct tape to it. We're at CSS3 (?) partially implemented with stuff being proposed for CSS4, and none of these common problems have been solved.
No, you missed what I wrote (for instance, nothing of what I wrote would qualify as "elaborate"). If you're referring to centering a div, the issue is not workarounds because the specs are half-assing it, the issue is workarounds because people are still running IE8. All current browsers ship flexbox. You can stop catering to those older browsers, but that's a business decision, not a web standard one.
Best time to plant a tree is 20 years ago and all that. CSS 2 came out in 1998. At some point, you have to let it go. Current state is very far from perfect, but the common problems you listed have been solved.
The article's example for "vertical" centering is both elaborate and doesn't actually work unless you dedicate the outer div entirely to centering and you do it by fixed dimension. Every "solution" I've seen or tried to this problem is actually a workaround that only covers a subset of possible (common) cases.
And requiring the middle div to be fixed dimension for centering to work is dire.
By contrast, imagine if something like position: absolute, align: center center; just worked! Or imagine if the elaborate CSS syntax for positioning background images were available for positioning any element within its offset parent. Imagine if offset parents worked sanely.
Again, centering a control within a rectangular context was a (i) known, (ii) common, and (iii) solved problem outside the web browser in 1990. Go see how resizing is handled in Interface Builder -- same as it was in 1989.
If there's a solution to cleanly upscaling images to fit, I'd like to know what it is. Downscaling relies of max-width|height which itself is more of a lucky side-effect (like most of the "solutions" CSS provides).
And the problems I point out in the second paragraph, such as having to write all kinds of code to handle resizing, are totally intractable with CSS right now.
"It's amazing that we get solutions for things that no-one really needs (animated 3d transitions...)"
I believe you will see some really amazing animated 3d ransitions used in production very soon, and they happen to be necessarily for the user experience, reducing needed document space for larger amounts of visual blocks.. at least in the projects I know they are being developed on.
CSS 3D is lovely, but it would be nice if they -- Apple, Microsoft, Firefox, and (especially) Google -- took care of freaking business.
The latest Chrome on Windows has completely screwed up select controls for no apparent reason -- they do things like fade and zoom in, but don't actually work properly (I'm a Mac guy, but our Windows guy has been cursing Chrome for days).
> I wonder if there's a good reason for the madness
Well the reason is that CSS originally wasn't intended for layout….
But since there was no other tool for layout, once the web design community decided to remove tables from layout it got drafted despite being severely insufficient. Layout modules have just started being developed, fought upon and implemented in the last few years. Here's how vertical centering looks like when using flexbox (http://philipwalton.github.io/solved-by-flexbox/demos/vertic...):
As the other replies mentioned, this is pretty standard. I think there's sometimes an exception for companies that a fund passes on, or for very small investments (e.g. if you personally invest $10k into a $5m company, then your fund's LPs probably won't care).
The main concern is this: let's say your fund passes on Twitter during its seed round, but you put $25k into it personally. 8 years later, the company has an IPO and you get a 100x or 1000x return. LPs are going to be frustrated that they let you invest on their behalf, but you took such a great investment for yourself. Even if the fund passed, there will always be the perception of "maybe they just passed so that Partner X could invest individually because the company looked very promising."