These are not just the best of times in SaaS and Cloud, but the best of times on steroids. The best of the best of times. It’s just crazy.
Huge VC rounds everywhere. Unicorns every week. Times are good — well, at least for the select few. The select few with topic metrics, top brands, and top traction.
So if you are offered a big term sheet — who should you pick?
I just have one bit of advice: pick who can most help you now.
“Duuuuusst in the wind…all they are is dust in the wind…”
— Ben Chestnut (@benchestnut) February 12, 2021
No one later will care. Do you know who invested in Datadog? In Zoom? In Notion? In Webflow? Do you care? No.
Do you know which fancy partner was on the board at Slack? No, you don’t. Even if you do, soon you will forget.
I do think it matters which investor you pick. You can only sell so many slices of the cap table, so many times.
So when you do sell a big chunk of that cap table — pick who can help you the most. Not who, or the amount, that sounds the best on TechCrunch. That does help with recruiting and PR. But then … it’s gone. It just helps a little, for a time.
So my advice:
- Pre-seed: Pick who most believes in you. You likely will have some near-death moments in this phase as a startup. Pick who deeply believes in you.
- Seed: Pick who can help the most operationally. Pick who best can get you your first execs, promote you, and help source the investors for the next round.
- Series A: Pick who you trust the most. Capital is starting to get fungible at this stage, but you are picking a boss (and a partner) for a decade. All things being even close to equal, pick who you trust the most.
- Series B: Brand. Might as well get the best brand now.
- Series C: Price, Price, and Price. At this point, you can recruit your own team, and everyone knows you. You have an established brand.
These are just some ideas. The real point is, brands matter and VCs can help — no doubt. But you’re going long. You’re planning to do this for 20+ years and build something iconic. No one will remember who was on your cap table.
So worry less about the timing, or when you raise, or when you become a unicorn. And focus more just on who can help you accelerate the most. With the least drama.
Most importantly, just like when you go to hire your VPs — don’t get blinded by the resume. Just because a VC partner works at a top fund — are you sure you want to work with that partner for the next 10 years? Just because a VC partner worked at a company you deeply admire, or that is the leader in your space, are you sure that’s the reason to pick them?
If you aren’t sure, just slow it down. Any VC that wants to fund you today will also want to fund you next week.