"Everything else, for funding, in the end didn’t really matter. The first $2m? Great, but we had multiple offers. Whatever. The $6m in Series B? Again, 3 offers in 2 weeks. Great, and truly, deeply, muchly appreciated — but not really a big event given that it was pretty easy to get and low stress. But that $500k gap between Series A excitement and the results necessary for Series B — that was the most critical $500k I’ve ever gotten. Otherwise, we would have died.I've gone through the same process multiple times. Each time, I was damn glad that we had solid VCs who had invested in the company. I've never had a company or any size that didn't require a "pass the hat" round from the existing investors to get it through a rough patch.
It’s great to have 20 cool execs invest in your company. And they won’t ask for anything, no board seat, no financials, no nothing. But what are the odds they’d collectively had written that second, $500k check for us? Zero. Absolutely, Zero."
There's a reason why I leave a space on my due diligence template for listing the lead investor of the round. If the shit hits the fan (and it always does), I need to know that the lead investor will put in more cash, and just as importantly, twist the arms of the other investors to do the same. I've put more money into certain companies that I knew were long shots, but I did so because I didn't want to be blackballed by the lead investor.
The rise of Angel List has enabled the party round, where the entrepreneur sets the terms, and all the various investors simply opt in. But while this may seem easier up front, taking the time to get a lead investor to believe in you, and invest in you--not just with money, but with time and trust--is almost always going to be a better option in the long run.