Raising funds for your company can be crazy! There's a company that raised around $416M, was valued at over $1B at one point, and eventually got acquired for about $465.5M.
But the founders walked away with a grand total of $0.
The investors had liquidation preferences totalling around $559M. The company sold for $465.5M, so the investors got the sale proceeds and there was apparently nothing left for the common shareholders.
The founders and early employees held common stock, so they reportedly got $0.
That's the part that surprised me. The company didn't fail. It wasn't shut down. It wasn't some tiny acquisition. It sold for almost half a billion dollars.
But the cap table basically meant the exit price wasn't high enough to get past the preference stack.
It also made me think differently about all those "startup raises $100M at a $1B valuation" headlines. Raising money isn't just getting cash in the bank. You're also adding preferred shareholders, dilution and potentially more money that has to be paid out before common shareholders see anything.
Founders should spend a lot more time thinking about the valuation when raising:
Because a massive sale is NOT the same as money in the bank for founders.