You can put any hat (or lens) on it, but the amount of money raised tells me a few things * :
1) If you can't build your product with a few $100k (or less), it is probably not that great of an idea. Google, Facebook, Myspace, Amazon, Apple, Microsoft, and more were all built on very small initial budgets. And no, these were not edge cases - thousands more successful startups were lean from the start.
2) If your business plan demands millions in financing, its probably because you are buying customers / marketing. I know very well the value of both, but none of the aforementioned companies launched with marketing budgets. Step 1: build prodcut; step 2: scale. You may also be building some magical super computing cluster that will revolutionize search, but we all know how Color turned out.
3) You have raised an excessively large round because VCs benefit from it. Schemes like "2 and 20", "10x exit" and so forth mean that VCs try to overvalue companies from the start. Raising capital is also a good way to dilute founder equity. VCs also have to make investments, or else their capital collects dust. This means they will try to invest as much as they can in promising companies, just so they aren't forced to invest the cash on less promising ones.
TL;DR: it is in a VC's best interest to pump as much cash as they can into your company (assuming they think they can flip it for a profit). Always start small, test for traction, then scale.
1) If you can't build your product with a few $100k (or less), it is probably not that great of an idea. Google, Facebook, Myspace, Amazon, Apple, Microsoft, and more were all built on very small initial budgets. And no, these were not edge cases - thousands more successful startups were lean from the start.
2) If your business plan demands millions in financing, its probably because you are buying customers / marketing. I know very well the value of both, but none of the aforementioned companies launched with marketing budgets. Step 1: build prodcut; step 2: scale. You may also be building some magical super computing cluster that will revolutionize search, but we all know how Color turned out.
3) You have raised an excessively large round because VCs benefit from it. Schemes like "2 and 20", "10x exit" and so forth mean that VCs try to overvalue companies from the start. Raising capital is also a good way to dilute founder equity. VCs also have to make investments, or else their capital collects dust. This means they will try to invest as much as they can in promising companies, just so they aren't forced to invest the cash on less promising ones.
TL;DR: it is in a VC's best interest to pump as much cash as they can into your company (assuming they think they can flip it for a profit). Always start small, test for traction, then scale.
*Keep in mind we are talking about software here.