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These days, if you raise money at a >=$80m-100m valuation, and are oversubscribed, most bigger Silicon Valley VC firms will offer to provide some founder liquidity. It’s not out of the goodness of their hearts. It’s so they can buy more. Bigger funds want to own as much as they can, and if they can get another 2%-3% more than otherwise, secondary liquidity is a way to get it. Some advice here though:
- Founders taking secondary liquidity at lower valuations creates huge signaling risk — especially CEOs. If a founder is willing to sell shares at $30m … there is no way I believe you are trying to build a $1b+ company. You are selling way, way too cheap.
- It’s much, much, much better to be asked. If a founder really wants to sell at almost any price, it’s a flag. But if the VC offers first, and the founder Continue reading "How often is it for founders to cash out in between raising rounds?"
This is a question that comes up a lot.
I started Groove from my house in Newport, Rhode Island.
Not San Francisco or Silicon Valley.
Not New York.
Not Boston.
Not really anywhere that would be considered a place with a real “startup ecosystem.”
At the time, I did find myself thinking a lot about the challenges that being “off the beaten path” came with, but in retrospect, those challenges were mostly superficial ones.
Sure, some investors are less likely to find your company interesting enough to look at because of your location. You don’t want those investors anyway.
The tech press is less likely to cover you. But tech press coverage, overall, has probably been the least valuable marketing exposure that we’ve had.
You can’t find top talent by