Lewis: Bedrock lost Rippling's Series B after trying to lower agreed valuation

“We agreed on evaluation with Parker. He's like, send me the term sheet. I'm ready to sign. And we were like, wait, Like all of their business at the time was SMBs. Now, since then they've extended, expanded surface area phenomenally into mid-market. They're starting to crack very early innings, but upmarket. Back then it was like all SMBs. We're talking like DJs, doctor's offices, barbers. Some startups were like, okay, like, wait a second. If everything's shut down, and then the government announced, like, the lockdown, like, okay, if everything's shut down for, like, a year, and they can't expand beyond SMB, we might be overpaying by, like, a factor of, you know, more than we thought. We knew we were overpaying, but we thought we might be overpaying by a factor more than we thought, and ultimately we concluded, and this is an internal, you know, inside baseball on VC firms, We had a lot of dry powder in that fund. That was many funds ago for us, several funds ago. That was bedrock fund two. We were just starting to invest out of our second fund and We had lots of calls with our LPs. They were calling us being like, what's your take on the macro? Everyone was freaking out. So all the LPs are freaking out about the macro. And we're like, actually there's a risk. Maybe it's an LPs would default if we call like, 10% of the fund right when COVID hits. And so it was a combination of the SMB thing, the like LP fear and the market at that moment in time. We talked ourselves out of it, but we did try to do it at a lower price. So we concluded, okay, we should try to renegotiate with Parker. We offered X. Let's try and get it at Y. He said, no thanks.”

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