[slashCJ]

Color was a completely reasonable investment, great team, ceo, vision. The failure wasn't the fact that they invested, its the check size. The guys at Sequoia should have said, great - love the idea, here's a $1M seed, make it happen. Produce a product we'll follow on with $5M, show traction, then you get the big round to scale.

A big round up front has the appeal to avoid the need to waste a product ceo's time of fundraising round after round. I think the big learning from the color investment is that a big round sets expectations unreasonably high. The press made a field day out of it as a sign of a bubble. The hindsight learning is big upfront rounds don't make sense, iterative investment that maps to the iterative learning of the company makes the most sense.