Raising capital as an offensive strategy

From Using Capital as a Weapon by Rob Go:

Capital gets talked about a lot in terms of things like runway, getting to profitability, solving the VC math equation, etc. But primarily, I think capital for early stage companies should be discussed in an offensive manner. As my partner David likes to say “capital is a weapon”. It’s true that sometimes too much capital creates tons of issues, but if wielded appropriately, capital is very much a part of a company’s offensive arsenal.

We think about this quite a bit with our portfolio companies as they scale. As seed stage investors, we find that we tend to prefer modest sized rounds early on to focus a team and establish discipline around being excellent at one thing and proving things out efficiently. But beyond the seed stage, capital is primarily about winning and winning big. We look to invest in [high potential] companies with capital efficient beginnings, and usually, those types of companies do take in a fair bit of capital and use that capital as a weapon. Typically, this happens in some combination of five ways.

1. Solidify Network Effects.
2. Geographic Expansion.
3. Data Scale.
4. Buying Credibility.
5. Boxing Out Competition.

3 thoughts on “Raising capital as an offensive strategy

  1. Pingback: Why your VCs want you to raise a large round | A Founder's Notebook

  2. Pingback: When no need for capital = negative growth signal | A Founder's Notebook

  3. Pingback: Why startups should raise money after finding product-market fit | A Founder's Notebook

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s