The importance of investor signaling in venture pricing
Hunch’s Chris Dixon (abbreviated):
- Don’t take seed money from big VCs – It doesn’t matter if the big VC invests under a different name or merely provides space and mentoring.
- Don’t try to be clever and get an auction going (and don’t shop your term sheet).
- Don’t be perceived as being “on the market” too long.
- If you get a great investor to lead a follow-on round, expect your existing investors to want to invest pro-rata or more, even if they previously indicated otherwise.
Read the full post.