How one company landed a great valuation on a 24-hour deadline
Eric Nakagawa stashed this in startups
6MM downloads in 4 days.
$5MM raised in 24 hours.
Wreckless and Daring!
He reeks of naïveté -- first time founder from Utah who doesn't know what he doesn't know.
Raising money "because their app had taken off" is a bad idea.
Raise money for a purpose, not just because.
And then he was challenged by a co-founder to raise money in 7 days?!
That's like accepting a dare to find someone to marry in a week -- and then marrying them.
They seem optimistic because they haven't seen this movie before, so they think it has a happy ending.
So there's the good news: no matter what happens, they will learn something.
I've never heard of this company, I just happened to click on this link from Twitter. This article and the journalist's perspective are appalling. Where is your moral compass? Applauding behavior like this is just wrong. They signed a term sheet with the first firm. They shook hands. They gave their word that they would work together. This isnt behavior new entrepreneurs should emulate! Transparency, honesty, loyalty - these are the values that matter in business and in life. How is that lost on the people? It's sad. Imagine if this behavior was taught to your children at school? These entrepreneurs should have been upfront with the first VC and told them they wanted better terms or they were going to shop around. If they received what they asked for, they should have honored that commitment. THAT's how you handle these situations ethically and properly. The first VC is lucky NOT to be working with people with these kind of ethics. Life is too short. Honesty matters.
I agree that the founders behaved badly and that transparency and honesty and loyalty all matter a lot more than maximizing some intermediate-round valuation.