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Tailscale has raised $160M

(tailscale.com)
655 points louis-paul | 1 comments | 08 Apr 25 10:36 UTC | HN request time: 0s | source
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tmpz22 ◴[08 Apr 25 17:51 UTC] No.43624557[source]▶
If they had taken just say $40 million would they be able to sustain their project for the foreseeable future and perhaps not yield as much future product direction and equity?

I honestly don't know how this big dealmaking works but it strikes me that when you take out this big of an obligation that the obligation has a gravity that may drag you in a direction you (or consumers) do not want to go.

Love Tailscale as a product (as does everyone I talk to) but genuinely want to learn more about the trade-offs as usually when we see big dollar signs all we do is celebrate.

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lazzlazzlazz ◴[08 Apr 25 18:02 UTC] No.43624690[source]▶
Equity investments like this don't need to be repaid, so there isn't a legal obligation to repay them. Of course, there is an obligation to maximize shareholder value — but that is totally independent of the dollar amount invested.

When founders raise this much money, it's because there's (1) a lot they want to do and hire for, or (2) they don't want to worry about monetizing the product for a significant period and focus on growth or product development.

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robocat ◴[08 Apr 25 20:06 UTC] No.43625928[source]▶
> Equity investments like this don't need to be repaid

You are saying equity is not bonds.

However investors expect to be repaid in the future with control and exhorbitant interest rates (based on risk). VC invests to make money, but that money comes from future equity rounds or IPO.

If you didn't take the VC money (and the business achieved the same growth without the money) then you'd expect you would have been better off by at least the amount invested (investors don't invest with the expectation of only getting their money back).

If the business doesn't succeed then you are on the hook to pay the debt from your equity via liquidation preferences.

VC payment is expectation statistics, but the investors know that game and invest to make money. That money comes from the current equity owners making less in the future.

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1. pc86 ◴[08 Apr 25 20:28 UTC] No.43626118{3}[source]▶
Not only the "expectation" but lots of VCs have preference built in that guarantees them huge returns on basically any liquidity event. It's probably not as likely in a Series C like this but 2-3x preference is not unheard of. There are few investment vehicles where for every $1 you put in you're guaranteed to get the first $3 made back first.