Nov 17, 2021 · 52m · saastr
The Highs and Lows of Fundraising from Founders That Have Raised $1B w/ Calendly, Coda, LaunchDarkly
Jason Lemkin · 12m spoken David Barrett · 10m spoken Shishir Mehrotra · 10m spoken Edith Harbaugh · 7m spoken Lloyed Lobo · 5m spoken
0:00 / 0:00
▶ Watch on YouTube →
gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
A panel of accomplished SaaS founders and venture experts analyze the dynamics of raising capital in high-valuation environments, contrasting venture expansion with financial discipline. They deliver actionable guidance on pitching tactics, sustainable company building, and aligning employee equity throughout the growth lifecycle.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Jason holds 26.8% of the talking time here. How this is scored →
Jason as informed peer 5.5 Guest teaching 3.3 Guest disagreement 5.6 Jason pushing back 3.9
speaking balance: gold is Jason, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 27:32 David Barrett's serial killer analogy
David aggressively attacks standard startup culture, comparing serial entrepreneurs to serial killers who treat team members like family only to sell them out for secondary liquidity.
Hardest push from Jason ▶ 45:20 Jason Lemkin refutes coffee meeting adviceJason forcefully rejects the notion of casual coffee chats and hiding slide decks by citing Mark Roberge receiving 100 qualified pitches a week and top VCs investing directly off cold emails.
Biggest teaching moment ▶ 34:52 Shishir Mehrotra breaks down Founders Preferred StockShishir delivers a masterclass on capital structuring by explaining how allocating 20 percent Founders Preferred Stock to employees enables clean secondary conversion into active funding rounds.
Jason holds their own ▶ 5:48 Jason Lemkin benchmarks cloud growth ratesJason grounds a theoretical TAM debate with hard BVP Cloud Index data, showing that top-quartile SaaS companies are now compounding triple-digit growth at 100M ARR.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Jason as informed peer | Guest teaching | Guest disagreement | Jason pushing back | Why |
|---|---|---|---|---|---|---|
| Debating Startup Valuations and the Current Venture Capital Environment | 3 | 4 | 7 | 2 | David Barrett forcefully rejects the premise that SaaS market expansion justifies soaring valuations, attributing the dynamic entirely to stimulus cash and market chaos. Jason participates minimally as moderator Lloyed Lobo drives the initial framing. | |
| Examining Market Expansion versus Increased Burn Rates in SaaS | 8 | 2 | 6 | 6 | After Edith and David debate whether SaaS market sizes have truly expanded, Jason steps in with authoritative BVP Cloud Index data showing top-quartile companies growing over 100 percent at 100M ARR. David concedes the insight, acknowledging that scale expectations rather than TAM have shifted. | |
| Evaluating Capital Efficiency, Dilution, and the Hazards of Overcapitalization | 5 | 3 | 8 | 4 | Jason argues founders would be foolish to turn down massive, low-dilution checks in the current market. David launches a fierce counterattack, characterizing Silicon Valley as a greater-fool game and warning that overcapitalization destroys company culture. | |
| Preserving Authentic Culture and Leadership Through Venture Scaling | 5 | 2 | 5 | 4 | Edith challenges David's claim that venture backing inherently destroys culture as a false dichotomy. Jason moderates by validating Edith's ability to maintain culture through massive growth stages while Shishir points out bootstrapped companies can also have poor culture. | |
| Assessing Stage-Specific Metrics and Venture Capital Decision Making | 6 | 4 | 8 | 4 | Jason explains the mathematical shift behind decacorn valuations, but David aggressively dismisses early-stage metrics as statistical noise and unprovable lies. Edith and Shishir counter David's cynicism by advocating for internal metric rigor and showing investors actual operational data. | |
| The Evolution of Pitch Narratives and the Reality of Building Long-Term Companies | 3 | 2 | 8 | 2 | The panel examines the shift from storytelling in early rounds to hard metrics at later stages. David launches a passionate critique equating serial entrepreneurs to serial killers who repeatedly sell out their employees and take massive secondary payouts. | |
| Structuring Secondary Offerings and Leveraging Founders Preferred Stock | 7 | 5 | 1 | 3 | Shishir details how Spotify and Coda structure regular employee secondaries and utilize Founders Preferred Stock to create liquidity. Jason breaks down the historical evolution of secondary sales from late-stage concessions to early-stage incentives. | |
| Navigating Founder-Led Funds and Alternative Capital Ecosystems | 6 | 4 | 4 | 4 | Jason probes the growing trend of founder-led syndicates and alternative capital sources in early rounds. Edith offers candid skepticism, calling founder funds weird and emphasizing that running an operating company is already a full-time endeavor. | |
| Streamlining the Fundraising Process and Strategic Pitch Preparation | 4 | 5 | 6 | 3 | Shishir advises compressing fundraising timelines and writing internal investment memos for partner champions. David offers satirical advice on pitching without numbers and asking for advice to manipulate VCs, prompting Edith to ask if he is trolling. | |
| Cutting Through Inbound Deal Flow Noise and Treating Fundraising as Sales | 8 | 2 | 3 | 7 | Jason directly pushes back against casual networking tactics by sharing hard inbound data from Mark Roberge and top VCs reading cold emails. He concludes with an incisive framework categorizing fundraising into pre-brand and post-brand enterprise sales execution. |
Statements from this episode (33)
Harbaugh: LaunchDarkly raised $200M Series D at $3B valuation
“Yeah, so we announced our Series D of two hundred million at a three billion valuation, which is pretty fun to say, by the way.”
Mehrotra: Valuations surged because tech markets are larger than expected
“I mean, I think the valuations have gone up because the, everybody's realized the markets are a lot bigger than they thought, and so it all sort of trickles down as you see these companies get much, much larger than people expected.”
Barrett: High startup valuations are bullshit caused by excess stimulus money
“I just think it's all bullshit. Like, I think the reason the valuations are high is because there's a shit ton of money in the markets, and it has no place to go. Like, there's, we just printed, what, three and a half trillion dollars of stimulus money out of …”
Barrett: High-Funded SaaS Startups Rely on Burning Cash, Not Acquisition Innovations
“Most of the companies rating it as shit tons of money, they, they're not using, like, novel customer acquisition techniques that couldn't have worked 20 years ago. They're just willing to lose more money on it. And then the VCs are willing to allow them to los…”
Lemkin: 25% of BVP Cloud Companies Grow 100%+ at $100M ARR
“In the BVP Cloud, which I think maybe LaunchSharkly was in, 25% of them are growing more than a hundred percent at a hundred million ARR.”
Lemkin: All Top-Quartile Cloud Companies at $100M ARR Will Hit $1B
“The top quartile, not the top one or two, the top quartile is growing triple digits at a hundred million, and when you think about compounding, assuming those have ARRs approaching north of a hundred, that means they're all gonna hit a billion in revenue.”
Mehrotra: Coda raised a $100M round at a $1.4B valuation
“Ours was a hundred at 1.4. It's a, and heavily oversubscribed, you could easily take it more at a higher price.”
Mehrotra: Do not take money if you cannot hit investors' return goals
“I, my view is don't take money from people if you don't think you can hit their investment goals. If you're misaligned with your investors, that's gonna be trouble at some point.”
Barrett: Silicon Valley overwhelmingly operates on selling to a bigger sucker
“There's like, build a viable business which you care about things like profit margin, things like this, or you just sell to a bigger sucker. Overwhelmingly, Silicon Valley is based upon the latter of those, and like, the reality is at no point relevant in actu…”
Barrett: Raising a gigantic VC war chest ruins company culture
“This whole idea of getting a gigantic war chest, I think that's bullshit. Like, I think that it's just a big waste of money and capital, and it just, like, ruins your company's culture.”
Harbaugh: Taking VC funding does not inevitably ruin company culture
“I think it's a false dichotomy though to say that if you take VC money, you're going to have a terrible culture.”
Barrett: Most VC Income Comes from Management Fees, Not Carry
“Like, the vast majority of a VCs, of a typical VCs income, will not come from their carry. It'll come from their management fees or some slice of that over the course of their career. They don't give a shit about the outcome or the success of your business by …”
Mehrotra: Pitch Investors with Your Actual Internal Board Deck
“I always, my view of it is show your investors your board deck that you use to run your own company. And if you're not willing to do that, then that's a problem because you're running a company differently.”
Mehrotra: VCs Relying Solely on Fees Cannot Sustain Great Funds
“It's absolutely not true that a VC that makes all their money off fees is going to continue to raise great funds.”
Barrett: Seed and Series A rounds are driven by storytelling, not meaningful numbers
“This, like, the seed and A are primarily just about, like, you and the story you tell. Like, especially the seed. A, it's like you have to have some evidence that, like, you know, the story has some anecdotal evidence of some kind of traction. And then, like, …”
Barrett: Hiring outside VC executives caps internal talent and drives them away
“How many of those same people just brought in some kind of outside executive from their VCs? Yeah, you just fucked your entire company. Because by doing that, you just indicated to every one of your employees, you cannot grow here. That we value skills that yo…”
Barrett: In startup funding rounds, VCs always win and employees rarely win
“Again and again, every single big round we have, the employees get fucked. And there's a whole bunch of reasons for that. It's like the VCs always win. The founders sometimes win. The employees rarely win.”
Mehrotra: Coda runs secondaries every round, prioritizing employees over founders
“We've done a secondary in every round employees go first, founders go last, and I think that's very important.”
Lemkin: A VC offered $10M in secondary not to sell to Adobe
“I sold in 2011, I sold in 2011 to Adobe, and a VC offered me ten million dollars in secondary, ok, to not sell.”
Mehrotra: 60% of Spotify employees sold stock before direct listing IPO
“One stat about Spotify, one of the reasons it worked, 60% of employees had sold at least some stock before the IPO.”
Mehrotra: 20% of every Coda employee's equity is Founders Preferred Stock
“At Coda, every employee, 20% of their stock is founders preferred.”
Lemkin: SaaS founders led Front's $600M valuation round
“The last round in front, which I think was at six or seven hundred million, was all founders. Okay, it was Ryan Smith from Qualtrics, I forget who else, the other billion, our friends, the billionaires of SaaS, but they all, I think, led that round instead of …”
Harbaugh: Active founders managing venture funds is weird
“I think it's weird, to be honest. Like, I have a full-time job. Like, I'm CEO and founder of LaunchDarkly. That's a full-time job.”
Lemkin: Startups can now complete Seed and Series A rounds without traditional VCs
“You can raise a seed or even an aid a day without ever needing a traditional VC, but still from folks you would look up to and respect. This wasn't even possible, I don't think, fully a year ago, right?”
Harbaugh: Raising solely from operators increases follow-on financing and pro rata risks
“I think the risk with that is that the pro rata and a lot of risks and subsequent rounds just gets bigger and bigger and bigger.”
Mehrotra: Compress fundraising timelines to maximize investor FOMO
“The biggest thing I tell people is compress the process. You can, you know, I think one thing we can all agree on, you should spend most of your time not fundraising, and so do whatever you can to take that process, and when you start it, finish it as fast as …”
Barrett: Never email pitch decks ahead of VC meetings
“Never mail your deck ahead of time, because then they'll make their decision before they see you.”
Barrett: Avoid venture capitalists as long as possible
“I would avoid the VCs as long as possible, because they're the devil. Now, don't get me wrong, sometimes you need to do a deal with the devil, but you're probably gonna get fucked in the process.”
Mehrotra: Founders should write the internal investment memo for VC partners
“The one thing I would encourage writing is write the investment memo that you think they should write to their partners. One of the things I think founders often miss is you're pitching a person who's going to become your advocate, right? And then think about …”
Lemkin: Top VCs read every cold email and decide within a week
“Every single one of them said they read every single cold email they get, and every single one of them invests in one week.”
Harbaugh: Meet one VC monthly to avoid cold fundraising starts
“To build the actual relationship, I do really like it sounds stereotypical, but like a coffee or a lunch, and just slotting that into your schedule every month. So that way you can be 12 different VCs in a year. And so that when it is time to actually run a fu…”
Mehrotra: Pitch memo feedback should come from adjacent-stage investors
“One is, when you're pitching take advice from people one stage investors that are one stage forward or back from wherever you're pitching. Just go, you know, you're pitching people for a normal B. Go, go talk to a few people that would normally be C and D rais…”