The Future of Fundraising is Already Here — It’s Just Unevenly Distributed

Bryce Roberts
3 min readAug 2, 2019

In a startup world awash with a steady stream eye-popping funding announcements, one last week caused the collective startup community to sit up and take notice. The amount, by comparison was modest, the valuation was significant, but the larger narrative the round captured felt important or significant or maybe even seminal.

There’s been a growing drumbeat of founders and investors questioning startup conventions of bundling ambition to fundraising and Notion embodies many of these new and emerging ideals.

From Erin Griffith’s NYT piece:

Notion’s ambitions are big — the company wants to replace Microsoft Office. But its executives don’t believe they need hundreds of millions of dollars in financing to do it, nor do they want the strings that come attached.

“We’re not anti-V.C.,” said Akshay Kothari, the company’s chief operating officer. “We’re just thinking for ourselves, rather than for them or other peers.”

This idea of modest raises, small and focused teams with major equity ownership and founder control runs in stark contrast to the seductive sequence of times and alphabetized fundraises that entrepreneurs have been condistioned to see as both the norm and the aspirational norm. What ambitious founders wouldn’t want and need a weaponized balance sheet?

While the conventional startup world hotly debated what constitutes Angel, pre-Seed, Seed, post-Seed or A Rounds, there’s an important faction of founders who’ve decided that value of controlling their own destiny far out weighs the “value add” of having a cap table cluttered with investors before they’ve reached significant scale.

During our v3 tour we created a simple spreadsheet that allowed founders to model their ownership if they followed the conventional VC path or chose to focus on revenue and profits early allowing they to skip one, or many, rounds of funding and dilution. The contrast is stark, and increasingly compelling to founders drawn to solving customers problems instead of convincing potential investors.

Notion’s founders understood this and used the early capital they raised to put them in a path to profits vs. a treadmill of sequential funding rounds and dilution.

From the Information article:

“Notion’s funding round means it is giving up about 1% of its equity, which is tiny relative to its valuation. Mr. Kothari said “Hopefully we never have to raise again,” adding that Notion has been “net profitable for the last few months.”

This is the piece of the story that seems to get lost in the rush to judge VC investment as good or bad or necessary or not. Investment is a tool and founders are getting much more adept and informed at how best to wield it.

Last week was a stark reminder of that.

The rules of engagement around investment are changing as quickly as the dollars are shifting to various stages for deployment. Retained ownership and optionality are slowly replacing amounts raised and artificial valuations as the ultimate signal of ambition. If you’re an investor or entrepreneur not taking notice of these changes you’ll be left flat footed in the months and years to come.

As PG’s Twitter thread highlights, in the black is the new black. Founders who recognize and build to that immovable milestone will have all the leverage in funding negotiations and control over their destiny that generations prior quickly ceded for pre-seed, seed and post-seeds.

Congrats to Notion on their success to date and heartfelt gratitude for baring the torch that lights this path for a new generation of founders to follow.