Well, of course. But let me simplify.

You made a “mistake” investing as a VC if the next round isn’t at least 2x the price you paid.

The reason is, given time, the IRR (return rate) needed on venture capital, and risk … you should have just waited. Better to pay $15m pre after a huge amount of risk is taken out, 18 months later … than $10m pre 18 months earlier, pre-customer.

So every pre-unicorn round really needs to be >at least< 2x the last round price to be considered a victory, and for VCs, really to implicitly justify the prior investment. Later, sometimes, just raising more money at $2b pre is OK. It’s so cheap at that price. But below $1b in valuation, you really ideally want to see each round at 2x the last one.

More than 2x is better, of course. 5x is not an uncommon bar from A to B, for the hottest companies (although 5x is harder seed to A).

Usually it also means the next round needs to be >2x–3x the size of the last one to make the >2x valuation jump math work out.

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