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Party rounds - Sam Altman

blog.samaltman.com · 422 words · saved by 1 readers

There is a recent trend in Silicon Valley towards party rounds—in early financing rounds, instead of raising large amounts of money from a few large investors, companies are instead raising small amounts of money from many small investors. The number of investors in such a round is commonly between 10 and 20, but I’ve seen rounds with over 50 investors. I think the rising popularity of party rounds is bad for companies. Ask some startups how useful their investors are, and you’ll get a variety of responses, but some commonalities emerge. It turns out that investors are generally about as involved as they are invested. Having at least one investor very focused on your company is valuable, even if the investor is not very good. The cadence and rhythm of meeting with someone every month to review progress and goals turns out to be an important focusing function [1]. In a typical party round, no single investor cares enough to think about the company multiple times a day. Each investor

There is a recent trend in Silicon Valley towards party rounds—in early financing rounds, instead of raising large amounts of money from a few large investors, companies are instead raising small amounts of money from many small investors. The number of investors in such a round is commonly between 10 and 20, but I’ve seen rounds with over 50 investors. I think the rising popularity of party rounds is bad for companies. Ask some startups how useful their investors are, and you’ll get a variety of responses, but some commonalities emerge. It turns out that investors are generally about as invol

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