Zanutto: High valuations and easy money create severe downstream financing risks
Derek Zanutto · 20VC: Lessons from Investing in Uber and Airbnb, How To Think Through Bundling vs Unbundling, Late Stage Funds Moving Earlier, Early Stage Funds Moving Later& The Mechanics of Venture That Founders Should Know with Derek Zanutto, General Partner @ Capital · Nov 9, 2020 · at 23:10
Derek Zanutto, General Partner at Capital G, discusses whether founders should accept high-valuation capital offers simply because the money is available.
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“One learning that I've come away with from those conversations and experiences is if you take the money and it's at a very high price and it's easy money, there is a risk to that because you, if you take it at too high of a price, you get over your skis and then you mis-execute, or you don't hit the plan you set out for investors, then you have a whole host of problems to think through when you need to raise the next round of financing, both in terms of, hey, you've hired employees now who are looking at a bunch of options that aren't with as much as they thought they'd be. You're looking at investors who are frustrated and not being the kind of supportive investors you thought they'd be. And so, you know, it does taking money at the high price just because it's there may not always be the right answer for the company.”
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