Dear SaaStr: Should you offer to give the money back to your VCs if your startup just isn’t going to make it?

It’s an interesting question. Many of us have been there — or at least close. I’ve been there.

When in the earlier days at Adobe Sign / EchoSign, my co-founder had left, growth stalled, and I had made a rough mishire and lost almost a year — I offered to give everything left back to my investors.

It was a great experience, actually.

The answer back was fast and swift: No Need.  Keep Going.

While I won’t say that alone inspired me to push on even harder, it helped. It helped me recommit to pushing through tougher times.  And tbey probably saw something I couldn’t quite see at the time.  We had happy customers, real if early revenue, and a smart team, still had decent runway, and importantly, I was still 100% giving it my all.  That was a bet they wanted to continue to play out.  It’s the type of bet when I invest now, I like to see play out.

A ways back A16Z wrote how Stewart Butterfield in the early days of what became Slack also offered to give all the money left back. His gaming company had failed, although they were excited to see where a new product, “Slack”, might go.

The board told him no, push on. We think you may have something. Not only did that lead to the Slack we all use today, and a $27 Billion acquisition, but it inspired Stewart to push on.


Today I often see the opposite.

I see too many founders unwilling to even have the discussion at all, or honestly. They just keep spending and spending, even as the business declines, or never even gets to any revenue.

Sometimes, this is OK. It’s not the investors’ money anymore, and as long as founders are ethical and honest, VCs generally can lose any single investment. It’s part of the model.

But what I can tell you is this. For me, for Stewart Butterfield, and many of the best — if things really aren’t working, for real. Not just a a tough patch, but simply not working.

Then offering to give the money back can be both liberating and inspiring.

If you are told to push on, that’s a true vote of confidence.

And if they want the money back? Well, maybe that’s for the best. Tough to hear, but often true.

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