Follow-On Financings

With the capital market turmoil raging, many argue that 2008 is going to be a tough year for start-ups to raise money, particularly follow-on capital in the form of a Series B financing (not surprisingly to any veteran viewers of Sesame Street, Series "B" follows Series "A" rounds of financing).

Series B financing processes are all about credibility. Does this management team have its act together to build a great, valuable company? As such, behaving like a pro during the fundraising process is critical. If the management team demonstrates they can run a great fundraising process, they can run a great company. If they look like this is their first time through the process and they are scrambling to react to questions and requests for materials, their ability to successfully execute on the business plan will be heavily discounted.

Jeff Bussgang

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