      SaaStr · 2021-01-25
      · 1955d
    

Prioritize Capital Quantity Over Valuation in SaaS Fundraising: Higher Pre-Money = Better De-Risking

Jason Lemkin argues that SaaS founders should prioritize raising more capital at the same dilution percentage from slightly lower-tier VCs over accepting less capital from top-tier firms. The additional capital deployed wisely can substantially de-risk ventures and accelerate growth more effectively than optimizing for investor prestige alone.

7 metrics· Cited 0× in the knowledge base ·Open source ↗

Metrics in this report

Capital Differential in Example

1.5$M

additional capital

difference between VC1 and VC2 scenarios

Capital Raised at Equal Dilution - VC1

4.5$M

at 23% dilution

based on $15M pre-money

Capital Raised at Equal Dilution - VC2

6$M

at 23% dilution

based on $20M pre-money

Higher Dilution Alternative

28.5%

for same $6M from Tier 1 VC

third scenario option

Standard Dilution Percentage

23%

in comparison scenarios

both VC options

Tier 1 VC Pre-Money Valuation Example

15$M

illustrative example

VC1 offering in comparison scenario

Tier 1.5 VC Pre-Money Valuation Example

20$M

illustrative example

VC2 offering in comparison scenario