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$6M raised. top tier investors. $2M still in the bank. $500k ARR, but declining.
and completely stuck.
talked to a founder last week in this exact situation. they were building a consumer app. it kind of worked. they grew quickly with social media, but it plateaued.
revenue somewhere between $500k-$1M ARR. consumers have churn, so declining revenue.
things didn't end here, after the product stopped working, cofounders had different ideas on their next steps. one cofounder wants to continue to try, the other wants to do a hard pivot.
classic founder split.
and investors don't care. at all.
not because they're bad people. because $4M is a rounding error for their fund. they'd rather write it off for tax loss harvesting than spend cycles figuring out the mess.
"just have a clean breakup" is the actual advice from tier 1 VCs.
this is what nobody talks about. there are hundreds of companies like this. raised real money. built real products. making real revenue.
and completely trapped.
wrong cap table structure. wrong cofounder alignment. wrong growth expectations set by the raise size.
the founder could return every dollar tomorrow and investors would shrug.
sometimes the best move is to stop optimizing for investor feelings and just decide what you actually want to do with your life.
if you want to sell your company, you should do so without worrying too much about how you are going to make the investors whole.
you don't owe investors every dollar back. what you actually owe is "a shot at greatness" - and that's impossible when you're spending months negotiating a breakup instead of building.
make decisions for your next big thing and stop worrying about sunk cost.
if investors believe that you did your best, they will support you again