Good post. When it comes to raising capital I think something I didn't comprehend at first is to respect the history of the management team. If they are inexperienced with the capital markets and were able to easily raise capital in the past, then there is a chance they "got lucky" and didn't need to plan for the business needing additional capital. So they have a greater chance of being caught flat footed this time around.
I agree. That's kind of why I like this mental model. Let's say they pick the worst option. Why? I've had severe dilution happen before, and I talked to mgmt. They seemed really confused by my negative reaction. Like, "This money is going to get us to where we want to be, why wouldn't you want to fund it?" When I explained things from an investors point of view, on a per share basis, they seemed more sympathetic. It made me realized that they were just quite inexperienced with this type of situation and they weren't purposefully trying to screw over shareholders.
Good post. When it comes to raising capital I think something I didn't comprehend at first is to respect the history of the management team. If they are inexperienced with the capital markets and were able to easily raise capital in the past, then there is a chance they "got lucky" and didn't need to plan for the business needing additional capital. So they have a greater chance of being caught flat footed this time around.
I agree. That's kind of why I like this mental model. Let's say they pick the worst option. Why? I've had severe dilution happen before, and I talked to mgmt. They seemed really confused by my negative reaction. Like, "This money is going to get us to where we want to be, why wouldn't you want to fund it?" When I explained things from an investors point of view, on a per share basis, they seemed more sympathetic. It made me realized that they were just quite inexperienced with this type of situation and they weren't purposefully trying to screw over shareholders.