Article · 8 min read

5 Pros, and 5 Cons, to Taking a VC Round at a Very High Valuation

Jason Lemkin · SaaStr Free Intermediate

Where Graham gives the principle, Lemkin gives the honest tradeoff table so you can actually decide. He lays out both sides (a high cap buys runway and dilution protection, but it locks you into 2x-or-bust expectations, higher burn, and a narrower set of exits that clear investor return hurdles) and names the asymmetry that should govern the call: crush your numbers and nobody remembers the price you charged, miss them and the high mark is what everyone remembers.

• Each round after a high cap must 2x+ the last, so the valuation you take today quietly sets the bar you get judged against next.
• A high valuation raises exit friction: acquirers and later investors need 3x+ their money, which prices out otherwise good outcomes.
• The safest hedge against a rich round is a moderate burn rate, which keeps your options open if growth lags the expectation.