Adam Radly and Bob Bates Recommend:

Adam Radly Bob Bates have raised more than $100 million for their own ventures so they often answer questions from startup founders about they can raise capital for their own businesses. There’s a lot of pitfalls and ‘whale hunting’ can be a pitfall disguised as an opportunity. This interesting article in Tech Crunch about what to consider if you want to go whale hunting.

A top-four tech company recently approached the CEO of one of our B2B portfolio companies with a tremendous offer. This company, with buy-in from its world-famous CEO, believes the startup’s core technology could help it catch up to a rival in an incredibly important space and wanted to discuss a $20 million investment on extremely favorable terms. This partnership would allow the startup to grow 10X in a year and would provide invaluable validation.

The founder was elated. I was terrified. This kind of deal is a classic “whale hunt,” and most of the startups that engage in them are doomed to end up like Captain Ahab.

While it’s immensely gratifying to receive this kind of validation from a market leader, the startup is at an early and important developmental stage. I’ve seen many promising startups blown up by ill-advised business development deals that swelled teams in a bout of euphoria only to see them wither if interest and focus from their partner wanes.

See the rest of the article here.

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