In the article I discussed the downside of raising capital at a too high of a price and referred people to a previous article I had written encouraging founders to raise “At the Top end of Normal” as opposed to stratospheric prices.
In the comments section Siqi Chen wrote a great question
“Whenever I hear advice about pricing a round too high for the next round, I can’t help but think: well, if the choice (ceteris paribus) is between
a) doing what is effectively a down round preemptively when I don’t have to, by underpricing my current round in this market vs
b) accepting the market price along with some risk of taking a down round in the future, if I don’t hit my milestones, why would I ever choose b)?”
To read the full, original article click on this link: The Damaging Psychology of Down Rounds
