Here's why some founders get $30M valuation caps and some get $7M:
It's unfair and not truly data-driven.
As startup fundraising season has picked up this September, I'm getting a lot of DMs and inbound asking for certainty in numbers/ How much MRR do I need to raise a pre-seed round? What growth rate will guarantee a successful fundraise?
The truth is: no one knows.
Look at the highlighted column below, $500K-$999K. Some founders raising this amount of cash get $30M valuation caps and some (the median founder) gets $10M.
Do the $30M cap companies have 3x the growth, the traction, the whatever of the $10M cap ones? Often, no!
Oftentimes they may even have LESS product built, FEWER actual customers, etc than the companies who raise on lower caps. So why the gap?
Because at this stage the bets are fundamentally about people, not metrics. The $30M cap founder is often from the right schools, or leaving the right prior company, or has a couple venture-backed exits under their belt.
Honestly not even blaming the VCs here. The likelihood of actually building a venture-scale company is so small that betting on traits rather than pure progress is a logical approach.
But founders engaging with VCs should drop the expectation that there are unwritten thresholds that you need to cross and then the capital will be made available. It's more unfair than that 🙏
Also SAFE val caps are not valuations, please and thank you :)
#startups #founders #SAFEs #fundraising
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