going big without realizing it…
I wanted to turn you on to a great post over at Redeye VC about the risks of high valuations and the unintentional impact it can have down the road. Many entrepreneurs think “the higher the better” when it comes to getting their company valued and raising money. Sometimes this really screws things up and forces the company down a path of having to execute the “go big” plan when it might not be the right thing for the business. The more money in, the higher the exit needs to be to satisfy institutional investors down the road. Josh has a great perspective as a seed-stage institutional investor on this topic, and the post has a number of good insights for entrepreneurs, especially if you are looking at a second round and just walked out of the meeting with your partners where you said…”I like firm A better, but firm B thinks we are worth more…” You are perhaps walking your own plank without knowing it.
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