How much should founders weigh dilution when deciding how much capital to raise?

Matan Bar · Feb 11, 2021

Fundraising should be driven by setting goals and working out the resources needed to hit them, rather than following a consistent fundraising strategy

Growth outpaced expectations twice, so goals were reset and a simple model showed far more funds were needed for engineering, marketing and sales hires — which triggered each raise

Scope: describes own practice rather than a universal prescription

16:11 20VC: Scaling to a $1.3Bn Valuation While in Stealth, The Power of Different Network Effects Within Payment Platforms & How To Leverage Your Board and Investor Base for the Most Value with Matan Bar, Founder & CEO @ Melio

Nico Wittenborn · May 22, 2023

These companies should only raise follow-on capital when the next chapter of acceleration is genuinely visible, and founders should avoid raising too much at too high a valuation too soon

Raising too much too early closes options; he'd rather keep options open than chase high valuations, and he wants everybody to win

Scope: a point of mismatch with multistage funds

18:04 20VC: Why Your Fund Model Should Not Rely on $10BN+ Outcomes, Why the Large Funds Got Too Large, The Rise of Solo GP's; The Pros and Cons & Is Consumer Subscription Even a Good Sector to Invest in with Nico Wittenborn @ Adjacent

Christian Lanng · Sep 27, 2023

Optimising for high valuations is a classic trap; he regrets it and would have taken lower valuations rather than fight to catch up to inflated numbers

Tradeshift raised at $100M on the A, $140M on the B and $350M on the C 14 years ago; when real SaaS metrics emerged and the market normalised they had to catch up to those numbers and resort to creative structuring to avoid a down round

Scope: stated as his own regret in hindsight

29:09 20VC: "How Being a Founder Almost Killed Me"; We Have Lied to a Generation of Founders | The Hardest Truths About Being a Founder Revealed | Why AI Co-Pilot is BS, Seat Pricing is Over & User Interfaces are Stupid with Christian Lanng

Jamin Ball · Jan 10, 2024

Founders should not let their cap table become a risk to the business: raise smaller amounts more frequently at milestone-based valuations you feel confident of clearing in eighteen months

Building the old-fashioned way means each round is underwritten against milestones you can actually hit

21:19 20VC: Did Figma Kill M&A Markets in 2024, The Three Biggest Mistakes Made in Growth Investing, The Three Requirements Companies Need to Go Public in 2024 with Ed Sim and Jamin Ball

Mike Maples · Jan 6, 2025

People have forgotten what a seed round is: the ideal seed round provides slightly more than the minimum viable money and time to take out the single biggest risk in the business, namely proving a nonconsensus insight is right

Seed is the riskiest time in the company and the most expensive capital because dilution is highest then; proving the insight is the most value-additive thing a founder can do and unlocks raising at will at much higher prices

Scope: implicitly criticizes $4–5M seed rounds as oversized

58:59 20VC: How To Do a 10x Seed Fund in 2025 | Three Frameworks to Evaluate Startups an Founders | Lessons from Losing Billions Missing Airbnb and Pinterest & Investing Lessons from Charlie Munger with Mike Maples @ Floodgate

Johannes Reck · Jun 23, 2025 · hedged

He should not have raised as large a Series A as he did; it cost too much dilution

Looking back the round meant too much dilution

Scope: retrospective judgment on his own Series A

0:00 20VC: The Wild Story Raising $450M From Masa and Softbank | Why My Biggest Mistakes Came From Listening to VCs | Why 100 VCs Turned Us Down | Why European Founders Are Tougher Than US Founders with Johannes Reck, GetYourGuide

Johannes Reck · Jun 23, 2025

He would not have raised as large a Series A; founders should actively manage dilution rather than take the biggest round available

Excessive early dilution creates later problems with employee equity, other investors, and an oversized early-stage investor share

Scope: in his own case it ultimately did not matter because founder re-ups fixed it over a long tenure

29:08 20VC: The Wild Story Raising $450M From Masa and Softbank | Why My Biggest Mistakes Came From Listening to VCs | Why 100 VCs Turned Us Down | Why European Founders Are Tougher Than US Founders with Johannes Reck, GetYourGuide

Max Junestrand · Aug 15, 2025

The right amount to raise is however much you need to reach the next stage or profitability, chosen so as to minimise dilution against a set threshold

He set himself a target of diluting less than 20%, and works backwards from the capital needed to reach the next milestone

Scope: threshold is founder-specific (20% for him, 25% for others)

31:16 20VC: 15 Term Sheets in 7 Days and Choosing Benchmark | Harvey vs Legora: Who Wins Legal and How to Play When You Have $600M Less Funding | Are AI Models Plateauing Today | Building a 9-9-6 Culture From Stockholm with Max Junestrand

Clay Bavor · Jul 4, 2026

Fundraising should be framed as raising the capital needed to reach the next clear milestone rather than as maximizing valuation.

They think milestone-to-milestone about what capital gets them to an unequivocally higher watermark in revenue and company scale, balancing that against dilution sensitivity.

Scope: sensitive but not maximally so to dilution; in their case rounds were inbound

41:24 20VC: Open Models vs Frontier Models: Who Actually Wins? | The $100,000 Token Budget Every Engineer Will Need | Why Forward-Deployed Engineers Are the Future of Enterprise AI with Clay Bavor, Co-Founder of Sierra

Christian Lanng · Sep 27, 2023

Raising more capital at a high valuation is justified when you're building something genuinely unprecedented, because more capital buys more shots on goal and more iterations

Nobody had built a global network for trade before, they had no clear idea how to do it, so more capital meant more attempts

Scope: scoped to companies attempting something never done before; says both he and Parker Conrad are partly right

31:11 20VC: "How Being a Founder Almost Killed Me"; We Have Lied to a Generation of Founders | The Hardest Truths About Being a Founder Revealed | Why AI Co-Pilot is BS, Seat Pricing is Over & User Interfaces are Stupid with Christian Lanng

Daniel Khachab · Oct 28, 2024

Founders should take the cash when it is offered, unless they have personal wealth to fall back on

More cash increases the probability of achieving your mission, and every decision should be made to increase that probability

Scope: he regrets other elements of raising at a $1.1B price

41:41 20VC: Why SaaS is Dead | Why AI First Companies Will Win | We are in the Middle of a Cold War for AI Talent | Why Europe is F******* and We Need to Stop Whining with Daniel Khachab, Co-Founder @ Choco

Raaz Herzberg · Dec 12, 2025

Founders should be generous with equity to employees and investors rather than optimizing ownership percentage, because a small share of a very large outcome beats a large share of nothing

Assaf Rappaport's approach: either the company becomes very big, in which case a small slice is huge, or it doesn't, in which case the percentage was irrelevant

44:46 20Growth: How Wiz Built a $30BN Brand in Enterprise | What Worked vs What Was a Mega Failure: Lessons Learned | Why Marketers Make the Worst CMOs & What To Look for in Growth with Raaz Herzberg

Alan Chang · Jan 5, 2026 · hedged

If you are able to raise a large round, you should — even though you don't need one to get started

Scope: conditional on being able to raise

42:28 20VC: $0-$260M in Revenue in Three Years: How We Did It | You Need to Work Weekends to Win — Most Founders Aren't Ambitious Enough | The Revolut Playbook: Speed, Urgency, Extreme Ownership, and Zero Excuses with Alan Chang @ Fuse Energy

Josh Browder · May 18, 2026

Early-stage founders' dilution sensitivity is misguided; they should take extra money if it meaningfully reduces the chance of failure

Outcomes are binary — success means hundreds of millions and life change, failure means nothing — so the expected value of even a 5% reduction in failure risk is effectively infinite

Scope: excludes obviously bad deals like selling 50% of the company for $100k to an angel; aimed at young/early founders

49:13 20VC: Turning Peter Thiel's $100K into $10M Angel Portfolio | The One Man Accelerator at The Four Seasons | Why VCs Can Be Sharks and What Founders Need to Know | Why Stocks and Cash are BS and You Should Invest in Land with Josh Browder

Arvind Jain · Jul 11, 2026

Founders should raise as large a round as they can from the outset

37:35 20VC: Why OpenAI and Anthropic Won't Win the App Layer | Why Teams Will Get Bigger Not Smaller in a World of AI | Why AI Removes Incumbents Advantage of Bundling | China vs America: Who Wins the AI War with Arvind Jain, Co-Founder @ Glean

Harry Stebbings · Oct 27, 2023

Jumbo rounds put founders in a worse position than smaller rounds, because if progress is slower than expected you cannot repeat a $10M on $50M, whereas a $3M on $15M can easily be followed by $7M on $45M

Customers don't convert and markets don't move as fast as projected, and a high entry price removes the option of a reasonable follow-on

Scope: projected out twelve to eighteen months

14:09 20VC: The Three Types of Seed Round Today, Why Seed Has Never Been More Competitive, Why Pricing Has Never Been Higher, Why Boards at Pre-Seed Can Be Helpful & How Too Much Cash Too Soon Can Harm Companies with Ed Sim, Founder @ Boldstart

Ed Sim · Jan 10, 2024

Small-revenue companies can still produce genuinely valuable exits, and founders should avoid raising too much cash because it limits their ability to exit at those prices

Palo Alto bought companies with $2-3M of ARR for $200-400M when they had a needed product and were ahead of the curve, even if weak at sales and marketing; too much capital raised closes off that outcome

Scope: requires a needed product and being ahead of the curve

41:51 20VC: Did Figma Kill M&A Markets in 2024, The Three Biggest Mistakes Made in Growth Investing, The Three Requirements Companies Need to Go Public in 2024 with Ed Sim and Jamin Ball

Trae Stephens · Apr 3, 2024

Founders get caught up in the moment and wrongly believe the only things that matter are up-and-to-the-right valuations and minimizing dilution, when they could simply take less at a lower price

Illustrated by the Silicon Valley scene where a founder who lost his company realizes he could have taken less money at a lower price

25:42 20VC: Founders Fund's Trae Stephens on Why The Most Competitive Deals are the Worst, Why No Company is Successful Because of their VC, Why We are Making ZIRP Mistakes Again Today, Why Loss Ratio is BS and Upside Maximisation is Everything

Tom Blomfield · May 13, 2024 · hedged

Founders were getting over-diluted at seed, giving away 25-30% of the company, and keeping dilution somewhat lower is probably better for them

Scope: caveat that YC's advice is customized per company, not a blanket rule; some founders have taken this too far and will only give away 8-10%

32:09 20VC: Behind the Scenes at Y Combinator: The Interview Process | What the Best & Worst Do in the Program | Do the Best All Raise Pre-Demo Day & YC's Fundraising Advice to Startups | Why the Value is in Application Layer AI with Tom Blomfield

Mike Maples · Jan 6, 2025

Founders raising $4M seed rounds simply because that's what it takes to sell 20% is a bad way to start, and it hurts founders more than VCs

Without a clear line of sight to validating the insight, founders spend three years doing a bunch of stuff, hire people and do seed extensions; the one thing a founder never gets back is time, so if the insight is wrong you're far better off learning that within a year

60:00 20VC: How To Do a 10x Seed Fund in 2025 | Three Frameworks to Evaluate Startups an Founders | Lessons from Losing Billions Missing Airbnb and Pinterest & Investing Lessons from Charlie Munger with Mike Maples @ Floodgate

Bucky Moore · May 5, 2025

Founders who raise too much money at too high a price lose valuable optionality, and keeping dollars in and last-round post-money as low as possible is often very beneficial

He has been in multiple situations where companies later concluded they raised too much at too high a price and found their flexibility limited in both downside and upside scenarios

Scope: some companies and types of founders are genuinely better off maximizing dollars raised at efficient dilution; ultimately the founder's choice

22:54 20VC Exclusive: Why Mega Platforms Will Win in VC | Why You Cannot Do VC If You Do Not Do Pre-Seed | Why Market Sizing is BS | Where Will Foundation Models Build/Buy Apps vs Where Will They Not with Bucky Moore

Harry Stebbings · Oct 27, 2023

The 'extra money buys runway' argument only holds if the founder leaves the cash untouched, which almost never happens

Once the money is there, founders find reasons to spend it on stretch hires, new geographies and new products

14:58 20VC: The Three Types of Seed Round Today, Why Seed Has Never Been More Competitive, Why Pricing Has Never Been Higher, Why Boards at Pre-Seed Can Be Helpful & How Too Much Cash Too Soon Can Harm Companies with Ed Sim, Founder @ Boldstart

Harry Stebbings · Nov 15, 2023

Very few founders are disciplined enough to raise a large round and leave it in the bank, because product expansion, new geographies and incremental hires always present themselves.

67:15 20VC: How to Survive and Thrive in a World of OpenAI, Are LLMs Being Commoditised, Where Does the Value Lie; Infrastructure or Application Layer, How Apple Could Win in a World of AI, How Amazon Could Threaten OpenAI and Why Google Struggle with Des Trayn

Harry Stebbings · Mar 18, 2024

Founders always spend excess capital rather than saving it — every great founder pulls forward a new product or hires a new data or sales team simply because they can

45:25 20VC: 19 Company Portfolio: 1 Decacorn, 7 Unicorns, 4 Acquisitions; One of the Best Seed Investors of All Time on How to Pick Generational Defining Founders, Why Nothing but the Founder Matters & Why the Best Investors are Never Happy w/ Gili Raanan

Harry Stebbings · Apr 8, 2024

The advice to raise all you can and park a rainy-day fund fails in practice because founders spend rainy-day funds when it isn't raining

Observed founder behaviour with excess capital

26:42 20VC: Postmates Founder Basti Lehmann on How the Uber Deal Went Down and How a $2.65BN Deal Turned into $5BN, Why Great VCs Add No Value and VC Value Add is BS Marketing & Why The Biggest Companies in History Will be Born Today and Replace Incumbents

Harry Stebbings · May 8, 2024

Founders who say they will just raise the money and leave it in the bank never actually do; no one is unaffected by suddenly having $30M

He has never observed the money sitting untouched in practice

13:19 20VC: GV's Tom Hulme on Why Investing in Foundation Models is like Investing in "Power Stations", The Conventional Wisdom in VC that is BS & Lessons from a 24x Angel Track Record, 255x on Robinhood and Making Billions on Uber

Frank Rotman · Aug 11, 2023

Inserting large amounts of capital into a company before it has cracked the code almost de facto ruins returns — the defining sloppiness of the late super cycle.

His firm's 20x and 100x outcomes were businesses that de-risked on very limited capital; late-cycle companies absorbed lots of money while producing little de-risking knowledge.

18:58 20VC Roundtable: NEW FORMAT: Why the Seed Investing Model is Broken, How to Make Money at Seed Moving Forward; Who Wins and Who Loses, Why Venture Value Add Platforms are BS and Failed and Why There Will be an IPO per Week in H2 2024

Miles Grimshaw · Sep 18, 2023

Raising too much money too soon is a real risk; investment pace should be driven by hiring and the initiatives you want to pursue, not by capital availability

At LangChain the bottleneck has been hiring great people and choosing initiatives, not capital

67:00 20VC: Benchmark General Partner, Miles Grimshaw on The Five Pillars of Venture Capital, Why Data Can Be a Trap When Early-Stage Investing, Investing Lessons from Missing Figma and Plaid & The New Business Model for AI & Why Co-Pilot is an Incumbent Strate

Tom Hulme · May 8, 2024

The absolute amount of money raised doesn't determine success or failure; what matters is whether it funds premature scaling

Money spent on premature scaling raises costs, and higher costs make a company less adaptable and slow its clock speed, which makes iterating to product-market fit harder

Scope: applies to startups still searching for product-market fit

12:47 20VC: GV's Tom Hulme on Why Investing in Foundation Models is like Investing in "Power Stations", The Conventional Wisdom in VC that is BS & Lessons from a 24x Angel Track Record, 255x on Robinhood and Making Billions on Uber

Tom Hulme · May 8, 2024

Daniel Dines was right to stay unfunded for years and only add capital at the market inflection point; putting $10M in at $50k ARR would have killed the company

Waiting for the market to develop meant capital was added as fuel to an existing fire rather than funding premature scaling

24:07 20VC: GV's Tom Hulme on Why Investing in Foundation Models is like Investing in "Power Stations", The Conventional Wisdom in VC that is BS & Lessons from a 24x Angel Track Record, 255x on Robinhood and Making Billions on Uber

Ryan Petersen · Nov 13, 2023

Raising very large rounds at what felt like the peak of the bull market was Flexport's best capital allocation decision because a fortress balance sheet lets you keep executing through a downturn

With a billion in cash they can execute without being overly concerned about the freight recession and the drop in tech capital markets

Scope: you can't predict market peaks; the 2019 raise was early and the market continued

12:02 20VC: Flexport's Ryan Petersen: Reflections on Leadership from 13 Years Leading Flexport, Why Velocity not Speed is Most Important in Company Building, How Money Creates Inefficiencies in Scaling, The Future of Trade with China & Why Remote Work is so Cha

Eléonore Crespo · May 9, 2025

Raising large rounds well ahead of need is the right call — a company should always be sitting on cash from prior rounds.

You never know what tomorrow looks like, and having cash lets you keep innovating rather than being trapped in a difficult position two years out.

Scope: their rounds were preempted rather than sought; credits her co-founder's paranoia for the discipline

35:09 20VC: Four Traits of the Most Successful Founders | How to Hunt and Close Talent Like a Pro and Where All Founders Go Wrong | Lessons Raising $397M From the Best Investors in the World with Eléonore Crespo @ Pigment

Johannes Reck · Jun 23, 2025

Raising the roughly $450M from SoftBank and Temasek was the right decision and is what made GetYourGuide what it is today

COVID hit six months later and the company would have gone bankrupt without that capital

Scope: part of the round was secondary, buying out earlier shareholders

44:47 20VC: The Wild Story Raising $450M From Masa and Softbank | Why My Biggest Mistakes Came From Listening to VCs | Why 100 VCs Turned Us Down | Why European Founders Are Tougher Than US Founders with Johannes Reck, GetYourGuide

Paul Erlanger · Jun 27, 2026

A company built on financial markets should raise venture capital primarily as downside protection against a sudden market turn, not because it needs the money

Robinhood and Coinbase show how volatile market-linked businesses are; with a five-to-ten-year horizon, a market turn could wipe out a company that just found product-market fit

Scope: initially planned to avoid VC entirely and only do an angel round

18:30 20VC: How We Got Fred Wilson, Benchmark and Index to Invest $94M | Why Robinhood's Strategy is Wrong | Why 1-1s are BS and What Every Founder Gets Wrong About Equity | Why Taste Beats AI But How AI Kills Org Charts with Paul Erlanger, CEO @ fomo

Ed Sim · Oct 27, 2023

Raising more than needed for psychological comfort ultimately hurts founders

Founders say a bigger round gives them three years of runway and peace of mind, but that comfort works against them

14:43 20VC: The Three Types of Seed Round Today, Why Seed Has Never Been More Competitive, Why Pricing Has Never Been Higher, Why Boards at Pre-Seed Can Be Helpful & How Too Much Cash Too Soon Can Harm Companies with Ed Sim, Founder @ Boldstart

Harry Stebbings · May 8, 2024

The biggest way aggressive investors damage companies is by pushing far more cash in than the business needs, which pulls the company off its strategy and diverts focus

He has a ~$4M ARR portfolio company offered a $40M term sheet, which immediately tempted them into a US expansion that is misaligned with their strategy and goal

Scope: framed as 'almost' the biggest way, alongside deal structure

12:20 20VC: GV's Tom Hulme on Why Investing in Foundation Models is like Investing in "Power Stations", The Conventional Wisdom in VC that is BS & Lessons from a 24x Angel Track Record, 255x on Robinhood and Making Billions on Uber

Harry Stebbings · Oct 28, 2024

Raising more cash than needed is harmful: it increases distractions and reduces capital efficiency, and the extra runway does not increase execution speed

42:03 20VC: Why SaaS is Dead | Why AI First Companies Will Win | We are in the Middle of a Cold War for AI Talent | Why Europe is F******* and We Need to Stop Whining with Daniel Khachab, Co-Founder @ Choco

Harry Stebbings · Nov 11, 2022

Founders have no real choice but to accept oversized term sheets, because if they refuse, competitors will take the money and outspend them on every channel

Capital availability forces the dynamic regardless of founder preference

22:12 20VC: Why Market Size is Everything | Three Signs of a Bull Market and How To Remain Disciplined | Why Investing is a Young Person's Game | The Secret to Negotiation | Missing a $200M Opportunity in Nubank and more with Martín Escobari, Co-President @ Ge

Johannes Reck · Jun 23, 2025

If you have traction in a big market where heavy competition is coming, you should raise aggressively and out-raise competitors while keeping spending discipline and focus

You have to do both at once: out-raise the competition but stay nimble and focused on core customer segments and core value proposition rather than overspending internally

Scope: conditional on traction, large market opportunity and expected competition; not applicable to the earliest stage

53:46 20VC: The Wild Story Raising $450M From Masa and Softbank | Why My Biggest Mistakes Came From Listening to VCs | Why 100 VCs Turned Us Down | Why European Founders Are Tougher Than US Founders with Johannes Reck, GetYourGuide

Michael Eisenberg · Dec 6, 2021

Large rounds are justified when the business is disrupting a big industry where customers demand a large balance sheet — financial services, freight, banking, payments.

Customers handing over money and payments want assurance you'll still be around, so a large balance sheet is a precondition for winning them, which drives founders to raise big rounds.

Scope: specific to balance-sheet-dependent categories, not typical software

17:50 20VC: Bill Gurley and Michael Eisenberg on The First Signs of an Impending Bust, What Happens with a Market Crash, How Do Public Markets Impact Private Valuations & The Biggest Lessons from 20 Years Investing in Venture

Jack Zhang · May 27, 2025

Dilution was not worth worrying about because building a global bank requires enormous balance-sheet capital, so raising as much as possible was correct

The vision is very capital intensive and sits on the balance sheet, so maximising capital raised mattered more than ownership

Scope: specific to a capital-intensive banking vision

70:54 20VC: The Most Insane Story in Startups: Airwallex: The Angel That Turned $1M into $1BN | The Fund That Pulled a Term Sheet & Lost $1BN | Rejecting Stripe's $1.2BN Offer | Scaling to $1BN in Revenue & 100% YoY Growth for 8 Years with Jack Zhang

Sanjit Biswas · Dec 8, 2023

Ramen-profitable bootstrapping isn't scalable for a hardware company because you need working capital to manufacture product and must pay real salaries to hire beyond founders

Hardware requires cash upfront for manufacturing, and hires need far more than grad students were willing to live on

Scope: specific to hardware businesses

12:11 20VC: $18BN Market Cap and $1BN in ARR in 8 Years; Samsara | How to Find Product Market Fit Reliably | How to Create a Multi-Product Company | The Pros and Cons of Serial Entrepreneurship with Sanjit Biswas, Founder & CEO @ Samsara

Harry Stebbings · Aug 8, 2026

Building photonics or energy companies is dramatically more capital intensive than prior technology waves, so founders need more money

The capital intensity of these hardware and energy categories exceeds earlier software-era startups

69:07 20VC: The AI Boom Will Create Enormous Roadkill: Who Wins & Loses | Why Founders Should Never Take Multi-Stage Money at Seed | Why Triple, Triple, Double, Double is Good Enough

Hussein Kanji · Jan 20, 2025

There is a correlation between how much capital a company raises and its probability of success, with roughly $300M being the average needed to reach unicorn status.

Scope: $300M is an average, not a threshold

0:00 20VC: Why Large Seed Rounds Increase the Chances of Success | When to Sell in Venture | Why Multi-Stage Firms Do Not Do The Work | Is Europe Totally F****** and Why AI Means London Can Compete with the US with Hussein Kanji

Hussein Kanji · Jan 20, 2025

There is a statistical correlation between how much capital a company raises and its probability of success, so contrarian investors must ensure their companies get properly capitalized

Data shows a $100k seed round has a tiny chance of producing an outlier while the odds roughly double between a $5M and a $10M seed; reaching unicorn status takes around $300M on average

Scope: some companies get there on ~$200M

41:22 20VC: Why Large Seed Rounds Increase the Chances of Success | When to Sell in Venture | Why Multi-Stage Firms Do Not Do The Work | Is Europe Totally F****** and Why AI Means London Can Compete with the US with Hussein Kanji

Ed Sim · Oct 27, 2023

Founders in AI compute genuinely need to raise large amounts of capital, so their big rounds are justified

The compute requirements demand it, though he isn't playing in that game himself

Scope: AI compute specifically; he doesn't invest in that segment

34:30 20VC: The Three Types of Seed Round Today, Why Seed Has Never Been More Competitive, Why Pricing Has Never Been Higher, Why Boards at Pre-Seed Can Be Helpful & How Too Much Cash Too Soon Can Harm Companies with Ed Sim, Founder @ Boldstart

Lucas Swisher · Feb 23, 2026

AI-era businesses are more capital intensive to start than SaaS-era businesses, which inflates seed rounds but may make the companies more durable at scale

Higher capital requirements make companies harder to start and take more capital, which also raises the barrier for the next entrant

Scope: contrast drawn against the SaaS world where little capital was needed

37:15 20VC: Inside Coatue's $70BN Machine: Why Price Matters Least | Why Mega Markets are the Most Important | How to Assess Durability of Revenue and Margins in AI with Lucas Swisher

Dominik Richter · Dec 1, 2023

Relative to HelloFresh's ambition, revenue growth and category, the roughly $300M raised pre-IPO was not an insane amount of capital.

Cumulative cash burn was about $300M before generating cash flow, breakeven came about three years post-IPO, and since then the company has returned cash to shareholders, invested and done M&A.

31:54 20VC: HelloFresh CEO on Why When You Raise VC You Only Have Two Options, Why Your IPO Price is Irrelevant, Why Timing is So Important in Going Public & Why D2C is Not Dead with Dominik Richter

Taavet Hinrikus · Apr 28, 2025

Founders treating large fundraises as the ultimate measure of success is nonsense; what matters is how little capital is deployed relative to the size of the outcome

Wise raised only $160M of primary capital and burned about $100M to build over $10B of value, versus companies that raise $2.5B to create $10B

33:10 20VC: VCs are Spreadsheet Monkeys and are Commoditised | Why Fees and Carry Misalign GPs and LPs | Why Founders Will Realise Multi-Stage Funds Damage Seed Rounds | Why We Need European Sovereignty More Than Ever with Taavet Hinrikus

Victor Riparbelli · Jan 15, 2025

You cannot build a $50–100B company by bootstrapping all the way; the bootstrapping ideal is a myth

Building things like a great go-to-market team requires capital up front — you hire expensive people who take ~nine months to ramp before the investment pays off — so you need a healthy balance sheet to chase big opportunities

Scope: applies to ambitions of building a very large company

11:44 20VC: Why Scaling Laws Will Not Continue | OpenAI vs Anthropic vs X.ai: Who Wins and Why | How Far Will Model Providers Go Into the Application Layer | The End State for Models: Many Specialised or Few Generalised with Victor Riparbelli @ Synthesia

Raaz Herzberg · Dec 12, 2025 · hedged

It is very hard to build a successful enterprise company without raising a large seed round

Enterprise selling requires deep pockets to be a real partner to executives with hard jobs and many vendor options, and to absorb short-term costs for the customer

Scope: based on her gut and experience; concedes it's possible without one

43:52 20Growth: How Wiz Built a $30BN Brand in Enterprise | What Worked vs What Was a Mega Failure: Lessons Learned | Why Marketers Make the Worst CMOs & What To Look for in Growth with Raaz Herzberg

Markus Villig · Nov 13, 2024

Bolt needed to raise the large round even though it was profitable enough not to need it, because winning the category long term required the capital

If they could deploy the new money even nearly as efficiently as prior money, they could quadruple the business quickly, which was necessary for long-term category success

48:32 20VC: Bolt; The Most Insane Story in Startups | Turning a $5K Loan into an $8BN Company | Why Every VC Turned Down One of Europe's Biggest Winners | Competing with Uber & The Future of Micromobility and Self-Driving

Mati Staniszewski · Sep 8, 2025

The right reason to raise is to pull planned bets forward, and a round at 30x current revenue was a good price

The capital let them spend on models and multimodal expansion, expand internationally, and build true enterprise functionality (reliability, Salesforce/ServiceNow integrations, SIP trunking) for the agentic platform

Scope: referring to their October 2024 round at ~$80M revenue

57:15 20VC: ElevenLabs Hits $200M ARR: The Untold Story of Europe's Fastest Growing AI Startup | The Real Cost of AI from Talent to Data Centres | How US VCs are in a Different League to Europeans | The Future of Foundation Models with Mati Staniszewski

Matt Murphy · Jul 27, 2026

Heavy capital raising and the resulting dilution is now normal across the whole AI stack, including application companies, not just frontier model companies

Companies are growing faster and want capital to play offense; there's also a signaling dynamic where raising every few months reassures employees, plus more secondary is needed to retain talent against the labs

Scope: companies that avoid raising a lot are rare

10:57 20VC: Leading Anthropic's First Ever Round | Will Open Source Threaten Anthropic's Business | Do Margins Matter in a World of AI | Why Triple, Triple, Double, Double is Not Good Enough Today | Why Series A is Hard Today with Matt Murphy @ Menlo

Harry Stebbings · Aug 8, 2026

Founders and investors are experiencing a normalization of extreme dilution, worse today than ever before, so exit proceeds disappoint relative to headline numbers

At exit you look at the number that comes back and wonder where it went

48:35 20VC: The AI Boom Will Create Enormous Roadkill: Who Wins & Loses | Why Founders Should Never Take Multi-Stage Money at Seed | Why Triple, Triple, Double, Double is Good Enough

Alex Bouaziz · Oct 22, 2025

Even though Deel had been profitable for three years and did not need investment, bringing in fresh capital and resetting the valuation was worth doing because it is important to the actual value of the company

13 acquisitions helped Deel grow fast, build new products and bring in founders, so the actual value of the company matters

6:39 Raise even without need to reset valuation and reflect actual value

Harry Stebbings · Oct 16, 2024

A founder's job is to raise money at the highest price and dilute as little as possible.

30:29 Founders job is to maximize price and minimize dilution

Zach Perret · Oct 16, 2024

Founders should not simply raise at maximum valuation and let investors fend for themselves; they should feel a deep responsibility for every investor making money, which sets a high bar for the company's performance.

Raising at a high price creates a hurdle rate you then owe your investors; he wants everyone who invested in Plaid to make a lot of money.

30:34 Founders owe responsibility to ensure investors profit not just maximize price

Alan Chang · Jan 5, 2026

Founders don't need a lot of capital or a huge seed round to get started

Fuse assembled everything needed for a full-stack energy MVP on about $1M — a wind turbine for £750k, a license for £75k, the former Ofgem CEO as an equity-only advisor, and a co-founder who qualified as trader and electrician

41:31 A small first round suffices even in capital heavy sectors

Gili Raanan · Mar 18, 2024

Enterprise software and cybersecurity startups need at least $5-6M at seed, so a $7M seed round is reasonable rather than excessive

That is what it takes to assemble a team, build the product, and stand up a small go-to-market motion that wins the first few deals and reaches paying reference customers before Series A

39:44 Enterprise and cybersecurity startups need 5 7m at seed to reach series a readiness

Gili Raanan · Mar 18, 2024

Building a substantial company is inherently expensive, which means valuations should be high so founders can raise the cash they need without taking 50% dilution

He has found no cheap way to build a large company, so companies must raise a lot and high valuations are the mechanism that makes that non-punitive for founders

42:46 High valuations let founders raise necessary capital without punitive dilution

Ed Sim · Oct 27, 2023

Collapsing the seed and seed-plus into a single larger round to buy three years of runway can be the right call when the timing of the market's takeoff is unknowable.

Ian Swanson raised $10M for AI security before the market was hot precisely because he couldn't know when it would be, and it worked — he closed a $40M round with customers signed up.

9:38 Collapsing multiple planned rounds into one larger raise is justified when market timing is unknowable

Mike Maples · Jan 6, 2025

Most of the companies cited as examples of long iteration — Klaviyo, UiPath, ServiceTitan — did not raise a lot of money before finding market fit

61:10 Cited long iteration companies actually raised little before finding fit

Harry Stebbings · Sep 27, 2023

Startups today should need less capital than ever, not more, so rising fundraising sizes for lightweight SaaS tools are hard to justify

Open source, insane and cheap tooling, and product-led growth have lowered the cost of building

46:16 Cheaper tooling means raise less not more

Brendan Foody · Sep 15, 2025

Another few hundred million in cash would not meaningfully change how Mercor invests, though a fortress balance sheet has benefits

They are already investing as aggressively as possible while remaining profitable without trying to be

31:58 Surplus cash beyond needs changes little except balance sheet strength

Nikhil Basu Trivedi · Sep 6, 2023 · hedged

Whether a founder should take the smaller round depends on the firm, the partner, and the capital match to the business — some companies genuinely need more capital early — but on balance he is biased toward stage specialists

His own firm is a stage specialist that only leads early-stage rounds, which biases him

14:41 Fit between capital amount and business need depends on firm partner and company specifics

Immad Akhund · May 12, 2025

If you're getting a very high valuation, the mistake is raising too little money against it — you should raise enough at that price.

Raising a small amount at a billion-dollar valuation leaves you needing to raise again into that price; raising enough means you may never need to raise again or can spend into aggressive growth.

13:14 Raise enough money to match a high valuation not a token amount

Max Junestrand · Aug 15, 2025

You would much rather own a small portion of something that becomes very large than a large portion of something small

The size of the ultimate outcome dominates the ownership percentage, especially given how large the legal software opportunity is relative to the services market

61:33 Rather own a small piece of a huge outcome than a large piece of a small one

Harry Stebbings · May 19, 2025

Rounds where a company raises ~$100M at a ~$2B price are good rounds to do, because the dilution is small relative to the amount of capital brought in.

$100M is a lot of financing to bring into a company, but only diluting ~5% for it is a small price.

66:06 Small dilution for large capital makes the round attractive

Harry Stebbings · Jul 11, 2026

A $2M seed round is no longer viable for building a team, because engineer salaries of $300-500k mean a founder needs roughly $6M to hire four people

Compensation for great developers has risen so much that small seed rounds cannot fund even a handful of hires

37:17 Engineer salary inflation forces bigger seed rounds

Tom Blomfield · May 13, 2024

YC does not have a 10% dilution rule; the ~10% figure is just an arithmetic byproduct of raising $1.5-2M at the $15-20M Demo Day valuations, and founders should absolutely consider 15-20% dilution for a great partner

Founders can reach their Series A milestones on $1.5-2M while retaining control, but top-tier or specialist funds asking for more ownership are worth taking, as evidenced by Sequoia, Andreessen, Accel, Founders Fund and GV leading rounds in the last batch

32:54 Worth accepting higher dilution for a top tier or specialist investor

Bucky Moore · May 5, 2025

Companies replacing something that already exists can responsibly raise big rounds because their market headroom is knowable, while companies creating a new market should stay lean and preserve optionality

If you have a poor understanding of your market and there's a non-zero chance it's very constrained, optionality is your friend; the cases where founders got fundraising wrong were when they didn't yet understand their market

24:41 Known replacement markets justify big raises new markets favor staying lean

Bucky Moore · May 5, 2025

Two or three extra years of runway can be punitive for a great founder because it traps them in a company that is only sort of working, at high opportunity cost to their time

Great founders' time is precious; raising too much money means you can be stuck with a mediocre outcome for years, and there are countless talented founders in that position today

25:49 Excess runway traps great founders in mediocre companies at high opportunity cost

TJ Parker · Jun 5, 2023

Founders shouldn't agonize over dilution on any single round — across rounds pricing averages out and regretting it is silly

One round may be underpriced and the next too frothy, but in aggregate it was fine; they raised, moved on, and the outcome worked out great

36:29 Dont agonize over single round pricing since it averages out across rounds

David Frankel · Aug 8, 2026

Dilution is driven by speed and capital intensity, not a universal trend: fast-momentum companies like Suno dilute remarkably little because the pre-money goes through the roof, while hardware companies like Whoop take longer and raise far more

Comparing two portfolio companies' journeys

48:56 Dilution depends on momentum and capital intensity

Bastian Lehmann · Apr 8, 2024

When a market hits an inflection point where the only differentiator left is capital for advertising and market-share grabbing, that is the moment a company should raise a lot of money

On-demand delivery became the largest consumer battleground for five to six years with billions deployed into marketing, so capital directly determined share

11:35 Raise heavily when capital becomes the sole competitive differentiator

Bastian Lehmann · Apr 8, 2024

No amount of funding dictates a startup outcome — if you raise little you worry you should have raised more, if you raise a lot you worry about complacency, so worrying about the raise size is not productive

There is no set of circumstances that necessarily dictates the outcome; the anxiety exists in either direction until you know the company works

26:00 No fixed capital raise amount dictates startup outcome worrying is unproductive

Frank Rotman · Aug 11, 2023

Standard dilution advice is nonsense because it reduces valuation to a division exercise — this much money raised, therefore the company is worth this much.

15:37 Standard dilution guidance wrongly reduces valuation to a mechanical division exercise

Sam Lessin · Aug 11, 2023

Owning 80% of a business with $50M of top line is a much better life than owning 10% of a business doing $500M with a lot of VCs in it, and a generation of founders will start optimizing for that

His friends who wholly own or barely funded their businesses are happier, far richer, and hold more option value than those who own 10% of hot companies and are locked into big corporate structures; running a billion-dollar penny-stock public company with too much capital in it is a pretty bad job

27:28 Owning a large stake in a modest business beats a small stake in a huge vc backed one

Jason Lemkin · Aug 11, 2023 · hedged

The fallacy of the lifestyle-style business in SaaS is that undercapitalized companies fall behind competitively after a phase transition, roughly past $5–10M of revenue

Venture is not magical but past a certain scale you cannot become Atlassian or Qualtrics without capital; a $20M payroll company that raised nothing cannot compete with Rippling and Gusto

28:55 Undercapitalized saas companies fall behind competitively past a scale threshold

Bret Taylor · Oct 2, 2024

Raising outside capital is worth it even when unnecessary, because boards and investors create accountability, signal to employees that the founders are building a generational company rather than a side hustle, and provide strategic advice.

Having served as both board member and executive, he genuinely values the strategic advice he received in those settings.

60:04 Raise unneeded capital for board accountability employee signal and strategic advice

Varun Mohan · Jun 2, 2025

Raising a lot of capital early does give a startup more shots on goal, but it only pays off if the company is genuinely willing and able to pivot quickly.

Having cash in the bank gave them the confidence to pivot and to launch Codeium entirely free without worrying about monetization details.

12:29 Capital buys more shots on goal but only pays off with fast pivoting

David Frankel · Oct 14, 2024

AI startups can still reach product-market fit capital-efficiently; it is only scaling and distribution that require enormous capital

Their approach is teams versus themes — the team still has to find PMF, and that phase hasn't gotten more expensive

47:18 Pmf phase remains capital efficient only scaling requires massive capital