Famous Last Words "and then we can raise our Series A..."

One thing that is a red flag for me as an investor is founders that build their company around valuation instead of value. I am seeing it more and more as I practice the art of early-stage investing. The narrative goes like this….

• Build an MVP

• Beg customers to use it

• Scrap together enough customers to pretend like you have product market fit

• Have 100’s of calls with investors during this time

• Raise seed round

• Beg more customers to use the product

• Miss your runway because you spent your time company building instead of talking to customers

• Run out of cash and look for a seed extension

This is usually when I see the founders. The company has a handful of customers that have paid for a product that may or may not be using it, and the founder is trying to raise $1M-$2M on a SAFE note pitching and using the language “then we can get to a Series A.”

The problem with this is that I hear the founder talking about burning cash, diluting the shareholders, and building a company before they have anything ready to scale.

I am much more interested in the founders trying to bring real value to the customers and shareholders. They do this by finding inefficiencies in markets and breaking them with technology. This practice creates value.

As a founder, what game are you playing?