[tiffanyh]

While I love companies that become profitable early and grow at a rate that allows them to continue being profitable ... it becomes an issue with investors.

Linear has raised over $50M+ (at $400MM valuation)

You just can't grow fast enough while being profitable - to grow into & surpass that kind of valuation ... in a timeframe ok that's for your investors.

https://tracxn.com/d/companies/linear/__xC97n-jdX7VZjDBpNyRf...

[eawgewag]

Wow.. really changes my perspective on this article to find out that Linear has raised 50M+

Thanks for this source

[rvz]

> While I love companies that become profitable early and grow at a rate that allows them to continue being profitable ... it becomes an issue with investors.

You know what? Good, and hopefully Linear sets the example instead of the others just running back to VCs again for another top-up.

Once you have shown that you're profitable, then you don't need them. The moment you do, you're always having to cede control and be at their mercy after raising and burning ridiculous amounts of their money and losing parts of your business.

Of course VCs see that as an issue as they feed on startups by doing this. If you're profitable then you don't need them.

Otherwise, you'll be on your Series Z until there are no more investors left to throw money on to your unprofitable startup.

[tiffanyh]

I agree with what you're saying ... but why take venture capital then?

They should have raised debt instead.

[enra]

"Venture debt is like a delicious sandwich that only costs ten cents, but occasionally explodes in your face" - PG

Part of being a startup is still that there is not a lot of historical precedent and uncertainty how well your business will do in the future. The problem with any fundraise is that it's always future looking (perhaps maybe you create some kind of option structure to call on it if needed).

VCs, especially Tier 1, can be still helpful in different ways, and them owning equity aligns the incentives more than debt.

[earnesti]

It is great for founders, and not so nice for VC investors, and Karri seems comically oblivious to that fact.

[brettgriffin]

He's not oblivious to this and the answer lies in "Raise on Your Own Terms" section.

Linear raised its A during the 2020-2021 frenzy and its Series B when every VC was telling their portfolio companies to reduce burn and get a 4-5 year runway. They created a profitable business in between.

They get to do every single thing exactly how they want to until they raise again (if they ever do).

[enra]

Correct. Those raises were made when there was some uncertainty about how the business would grow, and the opportunity and timing seemed right. For example, in 2022, it was difficult to predict how deep the market downturn would be. We saw several customers churn because their companies folded. In the end, the market didn't tank as bad than some expected, and we executed better than anticipated. In hindsight, we might not have needed that funding, but at the time, the outlook wasn’t as clear.

Part of this post is to debunk the myth that can be VC backed startup, be profitable and grow fast at the same time. VCs are quite keen in this approach too.

[WJW]

They address this in the article, and I'd say it's rather the opposite of being oblivious. Rather, they understand that you can get way better deals by choosing the times when investors come crawling to you as opposed to times when you're short on cash and the investors know they have you over a barrel.

It's not required of the founder to sell the company cheaply to investors, even though the investors would of course quite like that.

[leolas1995]

Just curious about all this as it's a topic that interest me, but I'm not sure I follow: how does Linear raising $50+M changes the point of the article? I believe it reinforces what they are saying about being profitable while also having some VC money to take risks and grow in a balanced way than if they didn't have it.