Jul 24 2007

How Much Should You Raise in a Series A?

There have been lots of great posts about “how much should you raise” going around the blogosphere these days.  Dick Costolo of FeedBurner Google has an excellent one up this morning titled Series A Financing: How Much to Raise?  In addition to a great rambling essay on how much to raise, Dick also reminds all entrepreneurs about the reality of revenue ramps:

“First, let’s address the hypothesis that the company will make money soon after launch. Irrespective of whether we’re talking about profits or just top-line revenue here, I would caution that it almost always takes longer to ramp your top-line than you think it will. Everybody walks into a venture pitch with their three year financial projections that have a lousy first year, a strong second year, and a monster third year. The truth is that even most ultimately successful tech startups have a slow first year, a slow second year, and then you get your spectrum of third year results ranging from really-taking-off to continued-doldrums. It just always takes longer than you think to launch, grow, ramp sales, close deals, etc.”