Danny Shader: Over-promising during fundraising breaks trust during crisis
Danny Shader · a16z Podcast | Raising Money and Valuing Startups -- What Happens When Things Don't Go As Planned? · Jan 2, 2019 · at 10:23
Danny Shader, founder of PayNearMe, discusses founder-investor relationships and the long-term risk of setting inflated expectations during fundraising.
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“Nothing will set up that relationship to be bad during bad times as if you over-promised when you were raising money and then disappoint, because now you've broken this bond of trust you need when you're, you know, weathering the inevitable storms that are going to happen as you go along.”
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“When people have proposed things that are sort of too high, I've tried to signal bringing them down, which is a delicate Balance.”
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“And it seems like that has really negative implications for the new common shareholder employee who joins, which, you know, I'm old fashioned, but that seems like that's not necessarily an interest of the company long term.”
Shader: Overvalued payments startups risk crashing the broader market
“My biggest fear just as an entrepreneur trying to run things rationally is that some of those guys are going to crash and burn and drag the entire rational segment of the market down with them.”
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“To the extent that we even do things like we don't have an office near a train station, right? Intentionally, like we're sort of self screening for that.”
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Shader: Overreaching for valuation creates severe risks unless future rounds guaranteed
“I don't know that stretching for evaluation is a great idea. Unless you have incredible certainty on your deal. And you know, absolutely know that there's going to be another round behind it at a higher valuation, either because you're pressing about the overa…”