#99: What VCs Don't Tell Founders About Raising Funding (Part 2 of 2) – Greg Head

#99: What VCs Don't Tell Founders About Raising Funding (Part 2 of 2) – Greg Head

Author: Greg Head June 28, 2024 Duration: 31:44

In this second of two episodes, Practical Founders Podcast host Greg Head discusses the next five important things venture capital investors don't tell new SaaS startup founders. Greg emphasizes that VCs invest in very few businesses and seek big wins. He highlights the importance of understanding the game of venture capital funding and the alternatives available to SaaS founders.

Check out last week's episode, in which Greg discusses the first five things that VCs don't tell SaaS startup founders about raising VC capital.

Quote from Greg Head, Host of the Practical Founders Podcast

"Professional VC investors are expecting very big results when they invest. If you sell a piece of your company to get a $5 million Series A investment, that typically ends up being about 20 percent of your equity. So you've just valued your company after funding at about $25 million.

"$25 million is the point where the venture capital investor comes in, so you can't sell your business for $30 million or $50 million anymore. That wasn't why the VC invested. They probably don't even want you to sell your business for $75 million. That's just a 3X exit.

"That's not what they invested their precious cash. They're going for a 10x or 20x exit. So even when you just take $5 million from VCs, you can't sell your company for less than $100 million and have everyone win. You have to sell for $500 million or more for everyone to be happy, including the founders."


Greg Head hosts the Practical Founders Podcast, a series dedicated to the often-overlooked builders in the technology and business landscape. Each week, the conversation focuses squarely on founders who have successfully scaled their software companies through means other than massive venture capital. You'll hear detailed, candid stories about bootstrapping, profitable growth, and the strategic choices that define a sustainable enterprise. These interviews dig into the real work of building a valuable company-the early decisions, the pivotal mistakes, the practical systems, and the personal resilience required. It’s for entrepreneurs and operators who are more interested in durable ownership and practical execution than in hype or fundraising rounds. By focusing on firsthand experiences, this podcast provides a grounded perspective on entrepreneurship. Listeners gain actionable insights and honest reflections from leaders who have navigated the complexities of building a business on their own terms. The discussions are in-depth and specific, offering a valuable resource for anyone looking to understand the tangible realities of creating a technology company without relying on external funding. This is where the conversation moves beyond theory into the applied lessons of proven founders.
Author: Language: English Episodes: 100

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