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Question: How do you determine how much capital your startup needs in the early stages?
The answer is “it depends.” We evaluate each startup based on its unique characteristics. For example, where in its lifecycle is the business? How capital light or intensive is it? What specific milestones are the founders trying to accomplish in the immediate term?
For a very early stage company that has developed a product and is looking to prove initial traction, the amount may be smaller. In an instance like that (what we refer to as a “seed” investment), we would be looking to fund the startup with sufficient capital such that the founders are able to make key early hires, acquire an initial set of customers and convincingly demonstrate market acceptance of its offering. For a later stage investment (Series A or beyond), we would look to fund the startup with enough capital for either a certain timeframe (typically, enough for 12-18 months so that the founders can focus on building out the team, accelerate customer acquisition, launch new products/verticals and accomplish key milestones) or, in a final round, to get to cash flow breakeven.
Our platform affords us tremendous flexibility to work with founders to determine the appropriate level of funding for any given point in a startup’s evolution and to continue to support the business as it continues to grow. For example, we made a small seed investment into BrightTag, a tag management solutions company back in 2009 and have supported the company in multiple larger rounds subsequent to our initial investment, including leading two insider rounds.
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