Lessons From a $45M Series B
I recently dropped my Funded episode with Igor Marinelli, Co-Founder and CEO of Tractian. I already knew Igor was impressive to begin with... but after this conversation, now I know that he's completely next level!
I'll save the details on why I think that is for those who want to listen to his full story... but I did want to highlight some key takeaways for you:
1. Quality Cap Table > Maximizing Valuation
"It's not about maximizing valuation and things like that. It's about putting the right people on our cap table, and I [had already] paid the price of putting the wrong people on my cap table like I had in the last round."
Oh the delicate balance between wanting the best deal vs. wanting the best team of investors on your cap table...
Although your gut instinct might be to take the highest valuation and run, sometimes (most times) it's better to choose the right team of investors that you know will benefit your company and future rounds. EVEN if it comes at a cost of taking the term sheet with a lower valuation, because how good is money if it comes with putting the wrong people on your cap table?
In Igor's case, he realized this after the fact. You'll hear more in the episode, but his Series B was actually $55M in the pocket of the company. $10M of that was put towards buying out investors so he could clean up his cap table - boss!
2. Build a Good Company, Investors Will Follow
"If an investor is not going to reach out to you, you're just not that interesting if you're reaching out to them. It is literally their job, right? Your job is to run the company. Their job is to invest in you.
Although I don't agree with every part of this statement, I do think he makes a solid point about responsibility.
When you’re fundraising, the founder / CEO’s job is to run the process and make sure you don't run out of funds so your company doesn't crash and burn. A VC's job on the other hand, is to find companies that represent a huge opportunity and produce outsized returns for their LPs. That's it.
Be aware of the roles you each play, and make sure that you are running a GREAT company before reaching out to investors.
Make sure the company you're running supports that definition, or else you'll be left chasing investors - which is never any fun.
There are a lot more takeaways but the truth is I'd rather have you listen to the full episode.
If you want to hear:
- Igor's crazy impressive childhood
- The story behind Tractian's Pre-seed, Seed, Series A & Series B
- Igor's (semi) controversial thoughts on how you should fundraise
- Why Igor dropped out of college and started Tractian
and more... make sure to listen to the full episode. I'll leave the links below!
Be chased,
Jason