Playbook / Lessons / Money: pitch, investor email
Cash-flow businessVenture money made stalled growth a crisis
Lavingia describes Gumroad's venture-funded years, when growth had to keep doubling to justify raising a larger round. When the numbers fell short of a Series B, he chose to become profitable at any cost and shrank the team from twenty to five. Monthly net profit moved from -$351,000 in June 2015 to +$10,000 in June 2016.
“But we were venture-funded, which was like playing a game of double-or-nothing.”— Sahil Lavingia, Reflecting on My Failure to Build a Billion-Dollar Company, Feb 2019
Do this
Write down the monthly growth your current funding plan requires, and check whether the business could survive if the next round never came.