Mark Roberge Roberge on The Science of Scaling: an AI company raising at $1B on $20M ARR can quadruple revenue, see the multiple drop to 10x, and still be worth only $800M.
Trae Stephens said raising a very large round means the next round cannot be smaller, and that a mega round is only justified if the price is so high that the company needs runway to catch up. He said phasing in capital more patiently lets the price be remarked over time so employees see appreciation, and keeps the price low enough to grant options at a lower strike price. He said this also serves the company, not only investors.
“I don't like the mega rounds especially at the early stage. Like I think it's bad for business.”
Listen to the episode Episode Fundraising & investors Link to this
Karri Saarinen says that after rounds have stepped up the valuation very high, a company that hits a snag can find growth has slowed and then face a down round, which he says nobody likes. He argues that a company can then be unable to raise when it needs money because it has lost momentum. He notes that the AI market moves fast enough that raising quickly may sometimes be necessary.
“you need money but you can't raise because you kind of like you lost some of that momentum”
Listen to the episode Episode Fundraising & investors Link to this
Karri Saarinen says that if a company raises at a very high valuation quickly, later joiners have less equity upside. He gives a hypothetical: a company valued at a billion dollars right after its seed round would need to become a hundred-billion or trillion-dollar company for new employees to benefit, unless it hands out huge equity packages. He says he has wanted to manage the valuation relative to employee upside, and that he prefers valuation to increase somewhat steadily over the years.
“The valuation goes up too fast. I don't think it's good for the employees”
Listen to the episode Episode Fundraising & investors Link to this
Mark Roberge's example is an AI company at $20M ARR that raises at a $1B valuation, a 50x multiple. If it doubles to $40M and then $80M over two strong years while the sector corrects to 10x, it is worth $800M, below its last valuation. He says that hurts equity and options and creates pressure to grow faster than the team can, so the goal is a healthy multiple rather than the biggest one.
“I don't think there's any sector that doesn't return to Earth at some point.”
Listen to the episode Episode Fundraising & investors Link to this
On Topline, Nick Turner said he did not want an investor asking for 5x growth after Dreamdata had just done 2.5x, and wanted a partner with realistic growth expectations.
He says the most important factor for him is how the firm or partner fits with Linear, which has a long-term view and has not hired fast or wanted to. He wants the investor to be aligned with that, so that he does not have to explain in the boardroom every time why the company is not hiring faster. The host adds that this also means the investor will not push for another markup a few months after investing.
“how is this firm or this partner like fitting to us because we do things a little bit differently and we have this more like a long-term view”
Listen to the episode Episode Fundraising & investors Link to this
Azam said entrepreneurs often index on a particular brand, check size or valuation, but the smartest ones check whether the partner is right for where they are. He said in a partnership where only the sponsoring partner is invested, the rest of the fund may not care, whereas an equal partnership incentivizes everyone to help. He said first-time founders often do not fully realize how much nuance this involves.
“figuring out which fund, around which stage, the partner you're working with and the incentive structure behind the fund that you choose”
Listen to the episode Episode Fundraising & investors Link to this
Nick said PeakSpan's focus on MarTech made it a good fit for Dreamdata. He said there are around 18,000 MarTech companies, so there are many opportunities, but founders need to sort themselves out within that crowd to do well in the category.
“A lot of investors will shy away from it.”
Listen to the episode Episode Fundraising & investors Link to this
Nick said he did not want an investor who asked for 5x growth in 2026 when Dreamdata had just done 2.5x. He argued that a company does not usually accelerate its growth as it gets bigger, so he wanted a partner with realistic expectations for future growth.
“When you get bigger, it doesn't it's not going to accelerate. It doesn't usually”
Listen to the episode Episode Fundraising & investors Link to this
Wade Foster on Topline watched Veterans United, owned 50/50 by two brothers who never raised a dime, grow from about 500 to 1,000 employees.
He recalled that in 2011 Qualtrics had $36 million in revenue and $24 million in cash and was fully bootstrapped, when SurveyMonkey's Dave Goldberg made an acquisition approach. Goldberg told him that taking venture capital would put him on the exit track, and Sequoia and Excel then offered a Series A that Ryan said was the largest since 2008 at the time.
“the second that they bring people into their tent. they are on the track, whether they like it or not.”
Listen to the episode Episode Fundraising & investors Link to this
Veterans United was owned 50/50 by two brothers and never raised a dime. Wade was employee 500 and left about 10 months later, when the company had a thousand employees. The experience made him skeptical that raising a series A, B, C and D is the only way to build a great company.
“They never raised a dime. And I was employee 500 there.”
Listen to the episode Episode Fundraising & investors Link to this
Sam said that if it takes 15 or 20 years to reach a billion in revenue, that is fine, and noted Zapier is a YC 2012 company, about 13 years old now. He offered this as one of two possible reasons for Zapier's approach. Wade responded that the first reason, money not being the constraint, was definitely the mindset.
“I'd rather hone 25 % of a billion dollar company than 3 % of a billion dollar company, even if the billion dollars comes five years sooner or something like that.”
Listen to the episode Episode Fundraising & investors Link to this
Wade reasoned that once money is not the constraint, giving up a portion of the company should be a thoughtful decision. He said few other things inside an organization are as hard to get back as equity.
“It's the most difficult to get back It's like the closest to a one -way door”
Listen to the episode Episode Fundraising & investors Link to this
Sam suggested two possible reasons for staying bootstrapped: that money was not the constraint, and that he would rather own more of a slower-growing company. Wade said the first was definitely the mindset, so selling equity had to be weighed carefully.
“One is no, money is not the constraint. Customer growth is the constraint. We don't need your money to grow.”
Listen to the episode Episode Fundraising & investors Link to this
Harry Stebbings on 20VC says founders underestimate how little VCs are excited by $1M to $4M to $8M to $16M ARR, and Venky Ganesan explains that VCs are seeing companies go 1 to 10 to 50 to 100 in about three years.
Ganesan explained that VCs are seeing companies go from 1 to 10 to 50 to 100 in about three years, and some go from 0 to $1B in 18 months. He said he does not think this continues forever, and urged a long-horizon view.
“going from one to four million and then four to eight million and then eight to 16 and then banking five years time, we're going to to get Venture excited today.”
Listen to the episode Episode Fundraising & investors Link to this
Sam Jacobs disagreed with presenting the situation as a fork in the road. He sees two kinds of companies: those 'in the flow' that are skyrocketing, and everybody else. He said his own company, like AJ Bruno's QuotaPath, faces multiples that have completely shifted, and most founders simply have to deal with being out of favor relative to companies like Harvey and Legora.
“And I think the reality is, Most people don't get that choice.”
Listen to the episode Episode Fundraising & investors Link to this
Peter says it is definitely not the easiest time to raise unless a founder is already in the legible cohort, which he describes as founders from top labs or who are spinning out of major companies and can get term sheets quickly. He says companies outside that group face a much higher bar because AI-native startups are growing faster than ever. He adds that growth metrics can be poked at, but the underlying reality that companies are moving faster is true.
“It's definitely not the easiest time to raise money unless you are already in the legible cohort.”
Listen to the episode Episode Fundraising & investors Link to this
Ranked by how many independent voices make each point and how specific their evidence is. Co-hosts of a show count as one voice, and a point needs at least two shows to appear here.
What one named guest described doing or seeing. Each is a single account, not a point several operators agree on.
“there is a cohort of the market where traditional seed investing where you're going to write three to six million dollar checks by, you know, eight to 15%, where I just think that is fully broken slash just isn't there anymore.”
“The above describes 90 % of growth rounds done between late 2020 and late 2021.”
“no investor will ever be as helpful as during that phase where they're trying to close a deal. Cause like their sole focus, they're like super incentivized to help.”
“I don't see $10 million series A as getting done anymore, or even $15 million series A. I think that the default is you don't get funded, or... You know, someone believes that there's like a $100 billion outcome here.”
“You have an existing business now show me that you can sell tokens”
“we couldn't really raise capital until we got Steve Papa to put in the first check.”
Mark Roberge's example is an AI company at $20M ARR that raises at a $1B valuation, a 50x multiple. If it doubles to $40M and then $80M over two strong years while the sector corrects to 10x, it is worth $800M, below its last valuation. He says that hurts equity and options and creates pressure to grow faster than the team can, so the goal is a healthy multiple rather than the biggest one.
“I don't think there's any sector that doesn't return to Earth at some point.”
Listen to the episode Episode Fundraising & investors Link to this
He said the company later sold at about 25x and IPO'd about two years later out of SAP at about 30x, multiples he cited without naming the metric. He said that in between, no public tech company he named was above 15x, and that Qualtrics' IPO could not be a down round relative to the last raise.
“Every single time we raised money, we had the ability to go at least 40% higher. And you just took the lower price.”
Listen to the episode Episode Fundraising & investors Link to this
Bret Taylor said that in all three rounds Sierra had higher valuations available that it did not take. He said the company cares about dilution and chooses a partner within a range. He acknowledged that the valuation it did take was generous.
“in all three of our rounds, we had higher valuations available that we didn't take.”
Listen to the episode Episode Fundraising & investors Link to this
Bret Taylor said his approach is to ask what revenue scale and growth rate would fill a given valuation and how much capital is needed to reach that scale. He said the team builds a business plan around product and go-to-market investment, run as a spreadsheet, with ranges around unknowns such as demand and competition.
“how much capital do we need to grow into the next milestone”
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From his time at a venture firm while at MIT, Kerrest saw entrepreneurs pitch giant plans and then come back 6, 12 or 24 months later having missed them, even when the business had done well. He argues that setting a lower bar and beating it makes the trajectory look up and to the right to investors.
“Just think about being a public company when you're a seed -funded company, basically. Be like, okay, I'm going to beat and raise. Every quarter, every six months, I'm going to beat and raise the number, just like you do when you have earnings.”
Listen to the episode Episode Fundraising & investors Link to this
Kerrest calls this a 'dirty secret' that investors won't like. Right after the round closes, the founder can tell the board they have scrubbed the plan and present a more realistic number, even one 20% below what investors diligenced, and then work from that reset baseline.
“that first board meeting after the financing has closed, You can come in and say, you know what? We really scrubbed the plan. And I think this is where it's going to come in. And I know it's 20 % lower than what you have in the data room that you did the diligence on.”
Listen to the episode Episode Fundraising & investors Link to this
AJ Bruno described a CRO at a company that grew from about $1 million to $7 million in revenue against a plan of $12 million. When the company proposed going to $22 million next, the investor said that was not good enough and pushed for $30 million. The hosts used it as an example of the importance of aligning expectations.
“It's all about expectations and aligning.”
Listen to the episode Episode Fundraising & investors Link to this
Zhang reasons that investors are maximally incentivised during the courtship phase, so if they are not helpful then, they won't be once on the cap table. Decagon did this for nearly every round and mostly responds to inbound investors rather than seeking them out. He believes Decagon may leverage its cap table more than any other company. He describes a self-reinforcing loop: when an investor's intro closes a deal, you tell them and their team, and they help more.
“no investor will ever be as helpful as during that phase where they're trying to close a deal. Cause like their sole focus, they're like super incentivized to help.”
Listen to the episode Episode Fundraising & investors Link to this
From early investors Zhang expects three things: no negative impact, emotional support, and hustle on introductions to hires and customers. Since no investor can find PMF for you, he thinks mid-career investors who have the time and motivation to grind for you are the early-stage sweet spot. He sees very senior GPs as very good during scaling. He presents this as the approach Decagon took, not the only one; Mirzadegan said he took a signal-first approach instead.
“So I think optimizing for mid-career investors in the early stages, I think is like actually the sweet spot. Because they have the time and the sort of motivation to really grind for you.”
Listen to the episode Episode Fundraising & investors Link to this
After the host described the trade-off between a superstar partner with many boards and an earlier-career partner building a reputation, Karri said it depends on the person. He says that at Sequoia he went with a less experienced partner, betting she would work harder and make sure Linear was well represented at the firm because it is probably one of her most important companies, and that he thinks it has worked well.
“I took the bet and I think it's been working well”
Listen to the episode Episode Fundraising & investors Link to this
Azam said entrepreneurs often index on a particular brand, check size or valuation, but the smartest ones check whether the partner is right for where they are. He said in a partnership where only the sponsoring partner is invested, the rest of the fund may not care, whereas an equal partnership incentivizes everyone to help. He said first-time founders often do not fully realize how much nuance this involves.
“figuring out which fund, around which stage, the partner you're working with and the incentive structure behind the fund that you choose”
Listen to the episode Episode Fundraising & investors Link to this
Nick said he did not want an investor who asked for 5x growth in 2026 when Dreamdata had just done 2.5x. He argued that a company does not usually accelerate its growth as it gets bigger, so he wanted a partner with realistic expectations for future growth.
“When you get bigger, it doesn't it's not going to accelerate. It doesn't usually”
Listen to the episode Episode Fundraising & investors Link to this
He says the most important factor for him is how the firm or partner fits with Linear, which has a long-term view and has not hired fast or wanted to. He wants the investor to be aligned with that, so that he does not have to explain in the boardroom every time why the company is not hiring faster. The host adds that this also means the investor will not push for another markup a few months after investing.
“how is this firm or this partner like fitting to us because we do things a little bit differently and we have this more like a long-term view”
Listen to the episode Episode Fundraising & investors Link to this
He says he usually declines VC meetings, but every now and then takes one with a firm or partner he finds interesting, and suggests taking perhaps one in every five or ten meetings and taking more as a raise gets closer. Before a fundraise he works from a short list of about five firms he already knows, rather than pitching around to twenty.
“by default, it's like a no, I won't take the meeting”
Listen to the episode Episode Fundraising & investors Link to this
Shipley says his first fundraise began with his number one VC candidate and was a total disaster. He says his seventh or eighth pitch was his best because the early ones showed what was working and what was not, and practice helped him handle tough questions.
“my seventh or eighth pitch was my best one because you'd screwed up in your early ones.”
Listen to the episode Episode Fundraising & investors Link to this
An inbound term sheet signals that other investors would also offer one. Manny cites Bending Spoons saying their acquisition offers stay valid at the same price a month later, and argues a VC's valuation shouldn't change in a week either. He also says he prefers big-brand investors as partners.
“you should never take an inbound term sheet because if somebody send you an inbound term sheet, that means that there's other people out there that will give you a term sheet.”
Listen to the episode Episode Fundraising & investors Link to this
He says this is why you can never be sure a deal is done until it is, though it did not happen with Yuri Milner. He also observes that Silicon Valley investors are extremely consensus-driven.
“people really shook hands and we do at this price. And next day, what I learned is that they called other investors and they pulled the syndicate to invest in 30 % lower valuation compared to what we discussed.”
Listen to the episode Episode Fundraising & investors Link to this
Sam says investors in 2021-vintage funds are exhausted and want to recycle capital into winners, and founders are equally tired. He describes this restructuring for companies whose cap table is optimized for hypergrowth they will not pursue, so that remaining holders have upside. He expects a lot of this to happen in 2026.
“take your series B investor, offer them pennies on the dollar to go back to the series A valuation, get them off the cap table”
Listen to the episode Episode Fundraising & investors Link to this
AJ Bruno said Max from GTM Fund told him he wasn't thinking big enough and preferred a competitor raising more, which angered him. As a second-time founder, he believed the competitor's 24-year-old founders didn't understand what that much money would do to their cap table, and he still thinks so. Later, an investor told him QuotaPath wasn't their thing and asked to get out. AJ worked it out for them, which put QuotaPath's cap table in a better spot.
“we were fortunate to have an investor that was like, you know what? This isn't my thing and just raised his hand and said like, I want out”
Listen to the episode Episode Fundraising & investors Link to this
Ganesan said that if holders of 2021 SaaS positions had sold 10-15%, even small amounts, they would have locked in gains. He tells founders that taking chips off makes both founders and investors more willing to 'go long', which keeps them aligned. He said it is not a fund-size issue, and illustrated this with Harry's 40x position. He personally learned the lesson from watching a $5,000 IPO allocation in Avanex rise to $200,000 and then sell for about $8,000-9,000 after a 90% drop.
“If people had taken 10%, 15% off the table, even if it's small, it locks in, allows you to go long.”
Listen to the episode Episode Fundraising & investors Link to this
Asad Zaman pushed back on Walrath, saying lessons from the SaaS era are being over-extrapolated. He said founders are making a lot of money along the way, secondaries are 'massively up', and employees are taking liquidity too. He cited a Peter Walker analysis published by Topline showing secondaries are not limited to the top few companies, and noted that Clay, which he called middle of the pack, has run tenders. He believes this rebalances risk among VCs, founders and employees and makes going for a generational company more reasonable.
“Founders are making a lot of money along the way. Secondaries are massively up.”
Listen to the episode Episode Fundraising & investors Link to this
Building on Dev Ittycheria's view that price likely sank Oura's IPO, Rory O'Driscoll said bankers tell you what you want to hear while competing for the mandate, then investors offer less. Choosing the banker with the highest number risks telegraphing a deal that then fails, which he called a far worse situation. Harry Stebbings argued Oura should have accepted the lower price and listed.
“will you just go for the person who says you're going to get the highest price but if he's whispering bullshit in your ear and it turns out not to be true then you end up in this far worse situation”
Listen to the episode Episode Fundraising & investors Link to this
Discussing Oura pulling its IPO at a planned $16B, he noted that Forerunner, one of the largest investors, had announced it would sell its entire position, something he had never seen. A company taking 10% dilution barely notices leaving money on the table. A VC selling at $18 instead of an expected $22 sees its whole return fall by 20%. His 'positive version' was that investors liked the deal but would not pay up, and the sellers preferred not to transact at that price.
“it's always harder to get a deal done when there's secondary. And when the more secondary there is, the harder it is to get a deal done.”
Listen to the episode Episode Fundraising & investors Link to this
He compared it to a bobsled run that, once started, has very few easy exits. He said he has been at IPOs that nearly pulled on the last day. He added that pulling is not fatal for a profitable consumer company like Oura, and would be harder for an enterprise company.
“the minute you unveil the S1, the minute it goes public, you're jumping in that bobsled and you're sliding to the bottom and there's very few easy way out.”
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Asad described a friend who raised a $1 million seed, found the company was not working, and had been advised to find a buyer that would also hire them as an executive. Asad said angels and venture investors know what they're doing and it is fine if they lose money. Sam agreed it does not matter, saying a VC who lost $50,000 will get over it.
“Like I think it doesn't really matter. Some some VC invested 50,000 that they lost. Okay. Like they'll get over it.”
Listen to the episode Episode Fundraising & investors Link to this
The speaker says VCs accept high probabilities of failure, so founders should not carry the pressure of making them whole with a difficult soft landing. If angels are wanted to be paid back, the speaker says a founder could cover that from their own pocket over time, and the founder should move on without the baggage.
“I think what this person should do is close it down, return the money.”
Listen to the episode Episode Fundraising & investors Link to this
said Trae Stephens (Grit), Karri Saarinen (Grit), Mark Roberge (The Science of Scaling)
Trae Stephens said raising a very large round means the next round cannot be smaller, and that a mega round is only justified if the price is so high that the company needs runway to catch up. He said phasing in capital more patiently lets the price be remarked over time so employees see appreciation, and keeps the price low enough to grant options at a lower strike price. He said this also serves the company, not only investors.
“I don't like the mega rounds especially at the early stage. Like I think it's bad for business.”
Listen to the episode Episode Fundraising & investors Link to this
Karri Saarinen says that after rounds have stepped up the valuation very high, a company that hits a snag can find growth has slowed and then face a down round, which he says nobody likes. He argues that a company can then be unable to raise when it needs money because it has lost momentum. He notes that the AI market moves fast enough that raising quickly may sometimes be necessary.
“you need money but you can't raise because you kind of like you lost some of that momentum”
Listen to the episode Episode Fundraising & investors Link to this
Karri Saarinen says that if a company raises at a very high valuation quickly, later joiners have less equity upside. He gives a hypothetical: a company valued at a billion dollars right after its seed round would need to become a hundred-billion or trillion-dollar company for new employees to benefit, unless it hands out huge equity packages. He says he has wanted to manage the valuation relative to employee upside, and that he prefers valuation to increase somewhat steadily over the years.
“The valuation goes up too fast. I don't think it's good for the employees”
Listen to the episode Episode Fundraising & investors Link to this
Mark Roberge's example is an AI company at $20M ARR that raises at a $1B valuation, a 50x multiple. If it doubles to $40M and then $80M over two strong years while the sector corrects to 10x, it is worth $800M, below its last valuation. He says that hurts equity and options and creates pressure to grow faster than the team can, so the goal is a healthy multiple rather than the biggest one.
“I don't think there's any sector that doesn't return to Earth at some point.”
Listen to the episode Episode Fundraising & investors Link to this
said Karri Saarinen (Grit), Sahir Azam (Revenue Builders), Nick Turner (Topline)
He says the most important factor for him is how the firm or partner fits with Linear, which has a long-term view and has not hired fast or wanted to. He wants the investor to be aligned with that, so that he does not have to explain in the boardroom every time why the company is not hiring faster. The host adds that this also means the investor will not push for another markup a few months after investing.
“how is this firm or this partner like fitting to us because we do things a little bit differently and we have this more like a long-term view”
Listen to the episode Episode Fundraising & investors Link to this
Azam said entrepreneurs often index on a particular brand, check size or valuation, but the smartest ones check whether the partner is right for where they are. He said in a partnership where only the sponsoring partner is invested, the rest of the fund may not care, whereas an equal partnership incentivizes everyone to help. He said first-time founders often do not fully realize how much nuance this involves.
“figuring out which fund, around which stage, the partner you're working with and the incentive structure behind the fund that you choose”
Listen to the episode Episode Fundraising & investors Link to this
Nick said PeakSpan's focus on MarTech made it a good fit for Dreamdata. He said there are around 18,000 MarTech companies, so there are many opportunities, but founders need to sort themselves out within that crowd to do well in the category.
“A lot of investors will shy away from it.”
Listen to the episode Episode Fundraising & investors Link to this
Nick said he did not want an investor who asked for 5x growth in 2026 when Dreamdata had just done 2.5x. He argued that a company does not usually accelerate its growth as it gets bigger, so he wanted a partner with realistic expectations for future growth.
“When you get bigger, it doesn't it's not going to accelerate. It doesn't usually”
Listen to the episode Episode Fundraising & investors Link to this
said Ryan Smith (Grit), Wade Foster (Topline), Sam Jacobs (Topline)
He recalled that in 2011 Qualtrics had $36 million in revenue and $24 million in cash and was fully bootstrapped, when SurveyMonkey's Dave Goldberg made an acquisition approach. Goldberg told him that taking venture capital would put him on the exit track, and Sequoia and Excel then offered a Series A that Ryan said was the largest since 2008 at the time.
“the second that they bring people into their tent. they are on the track, whether they like it or not.”
Listen to the episode Episode Fundraising & investors Link to this
Veterans United was owned 50/50 by two brothers and never raised a dime. Wade was employee 500 and left about 10 months later, when the company had a thousand employees. The experience made him skeptical that raising a series A, B, C and D is the only way to build a great company.
“They never raised a dime. And I was employee 500 there.”
Listen to the episode Episode Fundraising & investors Link to this
Sam said that if it takes 15 or 20 years to reach a billion in revenue, that is fine, and noted Zapier is a YC 2012 company, about 13 years old now. He offered this as one of two possible reasons for Zapier's approach. Wade responded that the first reason, money not being the constraint, was definitely the mindset.
“I'd rather hone 25 % of a billion dollar company than 3 % of a billion dollar company, even if the billion dollars comes five years sooner or something like that.”
Listen to the episode Episode Fundraising & investors Link to this
Wade reasoned that once money is not the constraint, giving up a portion of the company should be a thoughtful decision. He said few other things inside an organization are as hard to get back as equity.
“It's the most difficult to get back It's like the closest to a one -way door”
Listen to the episode Episode Fundraising & investors Link to this
Sam suggested two possible reasons for staying bootstrapped: that money was not the constraint, and that he would rather own more of a slower-growing company. Wade said the first was definitely the mindset, so selling equity had to be weighed carefully.
“One is no, money is not the constraint. Customer growth is the constraint. We don't need your money to grow.”
Listen to the episode Episode Fundraising & investors Link to this
said Harry Stebbings (The Twenty Minute VC), Sam Jacobs (Topline), Peter Walker (Topline)
Ganesan explained that VCs are seeing companies go from 1 to 10 to 50 to 100 in about three years, and some go from 0 to $1B in 18 months. He said he does not think this continues forever, and urged a long-horizon view.
“going from one to four million and then four to eight million and then eight to 16 and then banking five years time, we're going to to get Venture excited today.”
Listen to the episode Episode Fundraising & investors Link to this
Sam Jacobs disagreed with presenting the situation as a fork in the road. He sees two kinds of companies: those 'in the flow' that are skyrocketing, and everybody else. He said his own company, like AJ Bruno's QuotaPath, faces multiples that have completely shifted, and most founders simply have to deal with being out of favor relative to companies like Harvey and Legora.
“And I think the reality is, Most people don't get that choice.”
Listen to the episode Episode Fundraising & investors Link to this
Peter says it is definitely not the easiest time to raise unless a founder is already in the legible cohort, which he describes as founders from top labs or who are spinning out of major companies and can get term sheets quickly. He says companies outside that group face a much higher bar because AI-native startups are growing faster than ever. He adds that growth metrics can be poked at, but the underlying reality that companies are moving faster is true.
“It's definitely not the easiest time to raise money unless you are already in the legible cohort.”
Listen to the episode Episode Fundraising & investors Link to this
said Venky Ganesan (The Twenty Minute VC), Asad Zaman (Topline)
Ganesan said that if holders of 2021 SaaS positions had sold 10-15%, even small amounts, they would have locked in gains. He tells founders that taking chips off makes both founders and investors more willing to 'go long', which keeps them aligned. He said it is not a fund-size issue, and illustrated this with Harry's 40x position. He personally learned the lesson from watching a $5,000 IPO allocation in Avanex rise to $200,000 and then sell for about $8,000-9,000 after a 90% drop.
“If people had taken 10%, 15% off the table, even if it's small, it locks in, allows you to go long.”
Listen to the episode Episode Fundraising & investors Link to this
Asad Zaman pushed back on Walrath, saying lessons from the SaaS era are being over-extrapolated. He said founders are making a lot of money along the way, secondaries are 'massively up', and employees are taking liquidity too. He cited a Peter Walker analysis published by Topline showing secondaries are not limited to the top few companies, and noted that Clay, which he called middle of the pack, has run tenders. He believes this rebalances risk among VCs, founders and employees and makes going for a generational company more reasonable.
“Founders are making a lot of money along the way. Secondaries are massively up.”
Listen to the episode Episode Fundraising & investors Link to this
said Manny Medina (Topline), Mark Roberge ([Un]Churned)
Asked how investors react to Paid selling into enterprise and building a system of record, both slower than the AI companies going from zero to $100M in months, Manny says he doesn't worry about it. Take-rate companies are among the fastest growing, and nobody discusses where a fast-growth curve starts: you build, then lock in and go fast. He cites NVIDIA as a fast-growth story that took 30 years to make.
“So you can make that starting point anytime you want.”
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Roberge says VCs often assume first movers win and that blitzscaling is the only route to a large outcome. He cites Klaviyo, ZoomInfo and Dropbox as companies that did not blitzscale and still won. He says VCs don't care about the failures because they need one win in every 10 or 20 investments.
“In fact, like it leads to more failure than it does success, but that's the thing. VCs don't care because they need one into every 10 or one every 20 to hit.”
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said AJ Bruno (Topline), Frederic Kerrest (The Science of Scaling)
AJ Bruno described a CRO at a company that grew from about $1 million to $7 million in revenue against a plan of $12 million. When the company proposed going to $22 million next, the investor said that was not good enough and pushed for $30 million. The hosts used it as an example of the importance of aligning expectations.
“It's all about expectations and aligning.”
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Kerrest calls this a 'dirty secret' that investors won't like. Right after the round closes, the founder can tell the board they have scrubbed the plan and present a more realistic number, even one 20% below what investors diligenced, and then work from that reset baseline.
“that first board meeting after the financing has closed, You can come in and say, you know what? We really scrubbed the plan. And I think this is where it's going to come in. And I know it's 20 % lower than what you have in the data room that you did the diligence on.”
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From his time at a venture firm while at MIT, Kerrest saw entrepreneurs pitch giant plans and then come back 6, 12 or 24 months later having missed them, even when the business had done well. He argues that setting a lower bar and beating it makes the trajectory look up and to the right to investors.
“Just think about being a public company when you're a seed -funded company, basically. Be like, okay, I'm going to beat and raise. Every quarter, every six months, I'm going to beat and raise the number, just like you do when you have earnings.”
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said Alex Mashrabov (The Twenty Minute VC), Jack Zhang (Grit)
He says this is why you can never be sure a deal is done until it is, though it did not happen with Yuri Milner. He also observes that Silicon Valley investors are extremely consensus-driven.
“people really shook hands and we do at this price. And next day, what I learned is that they called other investors and they pulled the syndicate to invest in 30 % lower valuation compared to what we discussed.”
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Jack said they were very close to a SoftBank term sheet before the WeWork collapse. SoftBank then went silent before anything was signed, though he said they did not formally pull it. The company was running out of money when COVID arrived, which forced it to rely on a convertible and then a new round.
“we were very close to getting a term sheet from Softbank before COVID happened and then the WeWork stuff blowed up and all of a sudden the term sheet's gone.”
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said Jesse Zhang (Grit), Ryan Smith (Grit), Trae Stephens (Grit), Bret Taylor (Grit)
Zhang says Decagon never ran a fundraise; each round came from an inbound term sheet, and the founders often delayed because they are conservative about raising at too high a valuation given market cycles. He says six months between rounds is too frequent all else equal, but in heavy growth you have to raise to keep momentum, and he warns against planning on that cadence.
“All the rounds were roughly, like, six months apart. Which again, it's not always going to be like that, so we shouldn't plan for that. But six months, I think, is a little bit too frequent.”
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He framed the mistake as cap table management and said founders were failing the marshmallow test early in their cap tables. He said this is what he is seeing among companies around $100 million in revenue outside of the leading AI names, and he would not say which round is right in general.
“they're deciding the difference between two and a half and the equivalent of 12.”
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He said the company later sold at about 25x and IPO'd about two years later out of SAP at about 30x, multiples he cited without naming the metric. He said that in between, no public tech company he named was above 15x, and that Qualtrics' IPO could not be a down round relative to the last raise.
“Every single time we raised money, we had the ability to go at least 40% higher. And you just took the lower price.”
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Trae Stephens said every Anduril round was oversubscribed, and that the company could have adjusted the price to match supply and demand. He said that would have optimized for minimizing dilution and decreased velocity, which he does not think is the right call in most cases.
“Oh, yeah, yeah for sure like the Velocity was the name of the game and you know for us it was we were oversubscribed to every round”
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Bret Taylor said that in all three rounds Sierra had higher valuations available that it did not take. He said the company cares about dilution and chooses a partner within a range. He acknowledged that the valuation it did take was generous.
“in all three of our rounds, we had higher valuations available that we didn't take.”
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said Jesse Zhang (Grit), Karri Saarinen (Grit)
From early investors Zhang expects three things: no negative impact, emotional support, and hustle on introductions to hires and customers. Since no investor can find PMF for you, he thinks mid-career investors who have the time and motivation to grind for you are the early-stage sweet spot. He sees very senior GPs as very good during scaling. He presents this as the approach Decagon took, not the only one; Mirzadegan said he took a signal-first approach instead.
“So I think optimizing for mid-career investors in the early stages, I think is like actually the sweet spot. Because they have the time and the sort of motivation to really grind for you.”
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After the host described the trade-off between a superstar partner with many boards and an earlier-career partner building a reputation, Karri said it depends on the person. He says that at Sequoia he went with a less experienced partner, betting she would work harder and make sure Linear was well represented at the firm because it is probably one of her most important companies, and that he thinks it has worked well.
“I took the bet and I think it's been working well”
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said Keith Peiris (Topline), Liz Christo (Topline)
Keith said investors writing a $50M check had to believe Lightfield could reach a $100B outcome without moving enterprises like Costco off Salesforce. Switching systems of record is easier than before but still hard and annoying. The economic thesis was much larger deal sizes in SMB and mid-market, driven by agentic work and consolidation, and he says that only works if customers are happy enough with the agentic work to pay consumption pricing.
“look at our deal size for a company that's 200 people or 300 people or 400 people. This actually looks like a deal size for Salesforce with like, you know, 5,000 people because of all of the work that we're doing.”
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She says founders feel they have to tell a $10 billion outcome story to get invested. She describes vertical software companies automating one workflow with one wedge that pitch market sizes far larger than the market they are actually in.
“pitch decks read like really ridiculous right now where everybody wants to tell the story of like a $10 billion outcome because that's the new milestone that got set”
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Actions written 10 Oct 2026 from the most useful of 119 recent insights and checked against them.
Building on Dev Ittycheria's view that price likely sank Oura's IPO, Rory O'Driscoll said bankers tell you what you want to hear while competing for the mandate, then investors offer less. Choosing the banker with the highest number risks telegraphing a deal that then fails, which he called a far worse situation. Harry Stebbings argued Oura should have accepted the lower price and listed.
“will you just go for the person who says you're going to get the highest price but if he's whispering bullshit in your ear and it turns out not to be true then you end up in this far worse situation”
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Commenting on Vinod Khosla calling Factory, which Khosla Ventures led in its latest round, a 'struggling second-tier competitor', the speaker said they were flummoxed that he did it publicly. They said rival firms can now ask founders whether this is the partner they want when things go badly.
“And basically handed every other firm a weapon when they're competing on a deal saying, is this the partner you want when things go bad?”
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AJ Bruno says his biggest worry about the pivot is hitting plan this quarter, because nothing else is possible without hitting growth targets. He says 30-40% growth used to be good and even great for companies at Gainsight's and QuotaPath's scale, but now some board members lose interest unless you grow wildly faster. He sees excelling and meeting expectations as the only way to earn the board's trust.
“we're both in an era where 30 to 40 % growth was good enough and great, actually. But now, if you're not growing 3 ,000 % day over day, apparently, you're out of sight out of mind from some of your board members.”
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Ganesan explained that VCs are seeing companies go from 1 to 10 to 50 to 100 in about three years, and some go from 0 to $1B in 18 months. He said he does not think this continues forever, and urged a long-horizon view.
“going from one to four million and then four to eight million and then eight to 16 and then banking five years time, we're going to to get Venture excited today.”
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Ganesan said that if holders of 2021 SaaS positions had sold 10-15%, even small amounts, they would have locked in gains. He tells founders that taking chips off makes both founders and investors more willing to 'go long', which keeps them aligned. He said it is not a fund-size issue, and illustrated this with Harry's 40x position. He personally learned the lesson from watching a $5,000 IPO allocation in Avanex rise to $200,000 and then sell for about $8,000-9,000 after a 90% drop.
“If people had taken 10%, 15% off the table, even if it's small, it locks in, allows you to go long.”
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Ganesan described this as a cultural choice shared by his partners. A large commitment to a founder should be a two-way street, he said, while small passive seed checks are a different matter. He acknowledged that other firms back several players in the same space and said each firm must act on its own values.
“when we make a big commitment to the founder, we think of as a two-way street. They come into us, we come into them.”
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As a young Plaxo board member, Ganesan declined even to take a meeting when Sean Parker, who had just been removed from that board, invited him to get involved with a 'college dropout'. Ganesan said he probably could have written a $50,000 check into a roughly million-dollar seed round. He said Parker understood virality, network effects and human behavior and could boil them down simply, and that this is now his rule of thumb for founders.
“I'm always looking for people who are incredibly good at communicating very complex concepts in a simple manner and just have insight.”
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Ganesan described the original logic as taking 'build with me' money at a low valuation and then raising pure capital at a higher valuation. He said that, as in every cycle, the innovators were followed by imitators and then 'idiots', so the technique is no longer tied to company quality.
“in every cycle you get the innovators, then you get the imitators, and then you eventually get the idiots.”
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Asked how investors react to Paid selling into enterprise and building a system of record, both slower than the AI companies going from zero to $100M in months, Manny says he doesn't worry about it. Take-rate companies are among the fastest growing, and nobody discusses where a fast-growth curve starts: you build, then lock in and go fast. He cites NVIDIA as a fast-growth story that took 30 years to make.
“So you can make that starting point anytime you want.”
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An inbound term sheet signals that other investors would also offer one. Manny cites Bending Spoons saying their acquisition offers stay valid at the same price a month later, and argues a VC's valuation shouldn't change in a week either. He also says he prefers big-brand investors as partners.
“you should never take an inbound term sheet because if somebody send you an inbound term sheet, that means that there's other people out there that will give you a term sheet.”
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Manny says the company didn't need the money and he got carried along by the market and the momentum. He now takes a more deliberate approach to fundraising at Paid, noting that previous rounds determine the next one. A host added that Outreach's strong narrative made it easy to get caught up in that hype cycle.
“I felt like that I shouldn't have raised the last round. And the reason was we didn't need the money.”
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Asked whether Crusoe will be public by the end of 2028, he says he isn't sure. He points to the large amounts of capital needed for data centres and GPU clusters and the access to scaled capital that public markets provide.
“we do think that ultimately the company is probably better off in the public markets. It's just a matter of like, when does that make sense for us?”
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Explaining why Anthropic's founders are only now moving to lock in 50.1% voting control, he said voting rights in pre-IPO preferred structures typically expire on conversion. After that, control is based purely on ownership. He was speculating ('I'm willing to bet') rather than speaking from inside knowledge.
“it's when you convert everything to common stock that typically voting rights expire on the IPO. So what my guess is they had a pre IPO deal and now you got to recreate a post IPO deal because everyone's cap structure changes.”
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He compared it to a bobsled run that, once started, has very few easy exits. He said he has been at IPOs that nearly pulled on the last day. He added that pulling is not fatal for a profitable consumer company like Oura, and would be harder for an enterprise company.
“the minute you unveil the S1, the minute it goes public, you're jumping in that bobsled and you're sliding to the bottom and there's very few easy way out.”
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Discussing Oura pulling its IPO at a planned $16B, he noted that Forerunner, one of the largest investors, had announced it would sell its entire position, something he had never seen. A company taking 10% dilution barely notices leaving money on the table. A VC selling at $18 instead of an expected $22 sees its whole return fall by 20%. His 'positive version' was that investors liked the deal but would not pay up, and the sellers preferred not to transact at that price.
“it's always harder to get a deal done when there's secondary. And when the more secondary there is, the harder it is to get a deal done.”
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He gave two reasons first rounds have become extreme: labs genuinely need $200M+, and well-connected founders can raise a $50M seed even when they don't need it. Those founders skip the old '6 at 40' round or raise about $300K for a month and then go big. He said traditional seed investing in that cohort 'just isn't there anymore'.
“there is a cohort of the market where traditional seed investing where you're going to write three to six million dollar checks by, you know, eight to 15%, where I just think that is fully broken slash just isn't there anymore.”
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He agreed a $2-3M seed can still work in markets where a product can ship by building on others' infrastructure. He said a semiconductor company can need $100M before tape-out at a $2B valuation.
“it's a couple of hundred million minimum to enter the Neolab space and at five hundred million to enter the semiconductor space.”
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He accepted Rory's estimate of roughly 2.5x nominal venture inflation since 2010, but said the work a small team needs to do has not changed. He pointed to free model credits (up to $0.5-1M from labs) as a way to stretch the money. He said founders can do as much with $2-3M as ten years ago if they are frugal.
“the truth is, you can do as much, I think, for two to three million bucks as you could 10 years ago.”
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He described app companies that raised $10M, shipped the product for $3M, still had money in the bank when customers took off, and then raised $50M because they could. He said the heavy upfront technology lift funded by the labs is what lets everyone else build on relatively little.
“we took ten million dollars, but we shipped the product for three million bucks. And then the customers took off and shit, we still got five million bucks in the bank, but we're going to raise 50 anyway, because we can.”
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His partner Paul wrote the report. Harry argued that only perhaps 10-12 acquisitions can absorb that many companies, though he expects the outcome to be okay overall.
“he wrote this report on 102 Neolabs, $70 billion plus raised. And my question is just like, just how many of them can get acquired”
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He says this is why you can never be sure a deal is done until it is, though it did not happen with Yuri Milner. He also observes that Silicon Valley investors are extremely consensus-driven.
“people really shook hands and we do at this price. And next day, what I learned is that they called other investors and they pulled the syndicate to invest in 30 % lower valuation compared to what we discussed.”
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AJ Bruno said Max from GTM Fund told him he wasn't thinking big enough and preferred a competitor raising more, which angered him. As a second-time founder, he believed the competitor's 24-year-old founders didn't understand what that much money would do to their cap table, and he still thinks so. Later, an investor told him QuotaPath wasn't their thing and asked to get out. AJ worked it out for them, which put QuotaPath's cap table in a better spot.
“we were fortunate to have an investor that was like, you know what? This isn't my thing and just raised his hand and said like, I want out”
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Sam Jacobs disagreed with presenting the situation as a fork in the road. He sees two kinds of companies: those 'in the flow' that are skyrocketing, and everybody else. He said his own company, like AJ Bruno's QuotaPath, faces multiples that have completely shifted, and most founders simply have to deal with being out of favor relative to companies like Harvey and Legora.
“And I think the reality is, Most people don't get that choice.”
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Asad Zaman pushed back on Walrath, saying lessons from the SaaS era are being over-extrapolated. He said founders are making a lot of money along the way, secondaries are 'massively up', and employees are taking liquidity too. He cited a Peter Walker analysis published by Topline showing secondaries are not limited to the top few companies, and noted that Clay, which he called middle of the pack, has run tenders. He believes this rebalances risk among VCs, founders and employees and makes going for a generational company more reasonable.
“Founders are making a lot of money along the way. Secondaries are massively up.”
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AJ Bruno said his view in 2021 was that QuotaPath would grow into the valuation, and he still holds it. What he didn't foresee was SaaS multiples falling to 1x or less. He added that a CEO he met at Unbound, running a $50–100M business that is 'doing super well', also couldn't sell even with investors who wanted out.
“So QuotaPath, when we raised a $40 million round Series B at a 100x valuation in 21, my perspective at that time was we're going to grow into it.”
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Asad Zaman read Walrath's post on the show. It advises founders, especially those who have just raised a mega round, to seek out founders who raised huge rounds at big prices in the 2020–2021 cycle and now live with broken cap tables and disinterested investors. Walrath says becoming 'the next Airtable or Mural' is the likeliest outcome even for today's hottest companies, and that VCs have no incentive to get founders thinking about the downside.
“The above describes 90 % of growth rounds done between late 2020 and late 2021.”
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Asad Zaman described the pitch as: margins are bad, but look at the usage; models will get cheaper; give us more money. He said he doesn't disagree with playing this game, since it is 'the game on the field'. But a lot has to go right, and an actual 'crater' rather than a speed bump would bring a lot down.
“But you cannot sustain these businesses on anything other than an exuberant market and the downstream risk that people have been able to take with that exuberance in their mind, fueling them. If that goes away, this shit burns.”
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Zhang reasons that investors are maximally incentivised during the courtship phase, so if they are not helpful then, they won't be once on the cap table. Decagon did this for nearly every round and mostly responds to inbound investors rather than seeking them out. He believes Decagon may leverage its cap table more than any other company. He describes a self-reinforcing loop: when an investor's intro closes a deal, you tell them and their team, and they help more.
“no investor will ever be as helpful as during that phase where they're trying to close a deal. Cause like their sole focus, they're like super incentivized to help.”
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Early rounds bring validation and more people around the table, but Zhang sees diminishing returns beyond that. If you are hiring very fast, a higher valuation helps because nearly every candidate looks at the dollar value of their equity, which he says they shouldn't.
“after a certain point, though, I think there's diminishing returns of that, and like raising mostly helps you just like reprice your equity.”
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Zhang says Decagon never ran a fundraise; each round came from an inbound term sheet, and the founders often delayed because they are conservative about raising at too high a valuation given market cycles. He says six months between rounds is too frequent all else equal, but in heavy growth you have to raise to keep momentum, and he warns against planning on that cadence.
“All the rounds were roughly, like, six months apart. Which again, it's not always going to be like that, so we shouldn't plan for that. But six months, I think, is a little bit too frequent.”
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