One Investor Isn’t Enough

A company’s success is highly reliant on peer validation of investor decisions. This stunts diversity and must change if we want the best founders working on the biggest opportunities.

Say you’re an entrepreneur building something new and different, and you know you need capital. After pitching up and down Sand Hill Road (and all over South Park), you’ve finally found a believer, someone who sees what you’re trying to do and thinks you and your colleagues are the team to do it. Great! Now you can focus on building your business, right?

Nope. Get used to more of the same. You probably raised just enough to reach your next milestone but not enough to achieve self-sustaining profitability, which means you’ll be raising funds again soon. After all, on average, startups raise more than three rounds of funding. I know what you’re thinking: “But this investor is a true believer, and given how hard it was to convince others, they’ll sign up for the next round as well.”

Nope. It does happen, but it’s rare. In general, every round you raise has to be led by a new investor. Part of this is about dollars: Your seed-stage investor writes $500,000 checks out of a $50 million fund, but your A-round investor writes $5–10 million checks out of…