Is raising VC capital always a good idea for a startup?

Steven Loeb · June 25, 2015 · Short URL:

Here is a list of companies that haven't raised money in years, and how they are currently faring

With the amount of money flowing into venture capital right now, the most the ecosystem has seen in years, it's likely easier than it has been in a long time for companies, both large and small, to raise funding if they want to. Given that kind of opportunity, I would imagine that for many entrepreneurs there is also a lot of pressure to raise money just because they can. And because it helps their company look more viable as a result.

The question is, though, does it actually help a company to raise money even if they don't need to? And does the fact that a company hasn't raised any capital in two years mean something is wrong?

During Vator Splash Oakland in April, Adam Goldenberg, co-CEO of JustFab, talked about this very topic and how Fab, a company that was once valued at $1 billion, wound up selling for $15 million earlier this year. His diagnosis: they raised too much money, and thought that meant they had to be bigger than they actually were.

"I think in Fab's case there was an executional mistake. There was raising too much money too soon and I think what happened they raised so much capital they felt had to build a $3 to $4 billion company. And the size of their opportunity was probably more like $300 or $400 million," he said.

"There's nothing wrong with building a $300 million company. That's phenomenal."

So what does it mean when a company goes years without funding? CB Insights has created a short list of well-funded, well known companies, but ones who have not raised any capital since at least 2013, along with how they are currently faring.

Some are doing quite well, like Apptio, a provider of on-demand TBM solutions, for example, which last raised a $45 million round in May of 2013, valuing the company at $600 million.

Now, even though it lost its CFO to Amazon, the company also added now VPs of finance and investor relations, and it is thought to be looking at a potential IPO.

Web performance and security company CloudFlare, which last raised $50 million in December 2012, valuing it at $1 billion, is also planning for an IPO in 2016. The company is on track for a $100 million annual run-rate by the end of this year.

For these two companies, there doesn't seem to be any real need for them to raise more capital, at least not at the moment.

Others, though, may want to raise money have had issues which may have made investors balk.

Jumio, a provider of ID verification and payments validation solutions, last raised funding in May of 2012, a $3.3 million round that valued it at $130 million. The company has run into trouble recently, as just this week CEO Daniel Mattes was forced to resign over alleged financial improprieties.

Asana, a workplace collaboration tool, last raised funding in July of 2012, a $28 million round at a $280 million valuation. While the company says its doing well, and that it it came in ahead of target on 2014 revenue goals, the truth is that its thunder was stolen by Slack, a company that has shown that a company in this space has the ability to raise a lot of money.

Others are just now deciding to, once again, start fundraising. 

That includes repository hosting service GitHub, which last raised funding in July of 2012. The company has had its own scandals in recent years, with sexual harassment claim made against GitHub, which forced the resignation of co-founder and former CEO Tom Preston-Werner. But that is apparently behind it now, as it is seeking to raise new funding at a $2 billion valuation.

Online healthcare platform ZocDoc is also looking for a new round, after not raising money for a long, long time. The last time it raised capital was all the way back in 2011, when it raised $50 million at a $700 million valuation. As of last year, the company was reportedly raising funding at a $1.3 billion valuation.

The two most interesting cases cited here are Flipboard and Kickstarter.

Mobile media magazine app Flipboard last raised funding in December of 2013, a $50 million round, bringing its valuation to $800 million. Now the company is actively trying to sell itself, reportedly talking to Twitter about a potential acquisition for $1 billion.

Flipboard is also a potential acquisition target for other companies, including Facebook, which tried, and failed, to launch its own reader app called Paper. Its easy to see Facebook simply buying a company to do what it couldn't do in-house. Google has also been mentioned as possibility. 

The reason many have cited for Flipboard's eagerness to be sold off has to do with its user numbers. which have reportedly begun to slow. Still, it is rare for a company of Flipboard's size, and success, to put itself on the market like this.

As for Kickstarter, the company has not raised any capital since 2010, and that does not look to change any time soon, as it is likely making a good amount of cash. I calculated that the company likely made at least $21 million in revenue in 2013, and the company's numbers rose even higher in 2014, with over $500 million pledged.

The company also has no interest in exiting, as Kickstarter's then CEO Perry Chen said in 2012: “We don’t ever want to sell this company, we don’t ever want to IPO."

What a rare sight on a tech world with busting valuations and huge amounts of money being thrown around: a company that is happy with what its doing, and doesn't seem to need to prove anything to anyone. How refreshing is that?

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CB Insights

CB Insights is a private company database that provides real-time information on the world's most promising companies, their investors, their acquirers and the industries they compete in to help you invest smarter.

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The world's first social magazine. Flipboard is a fast, beautiful way to flip through news, photos and updates your friends are sharing on Facebook and Twitter. 

Inspired by the beauty and ease of print media, Flipboard╩╝s mission is to fundamentally improve how people discover, browse and share content across their social networks. rd



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Jumio is applied computer vision technology. Devices are able to read and understand information out of an image, captured by a connected camera. Jumio’s technology is designed to make everyday life easier, quicker, smoother.

Jumio Inc. is headquartered in Mountain View, California and operates a development center in Austria. The company was founded in 2010 by Daniel Mattes and employs 45 people. More on

Jumio’s advisory board includes Zain Khan, former Google executive, Mark Britto, former Amazon executive, Thomas Jungreithmeir, managing director of TJP and Bjorn Evers, former gaming industry CEO. Jumio's CTO is Thomas Willomitzer, co-founder of Facebook co-founder Eduardo Saverin has a seat on the board of directors.




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Fab is on a mission to help people better their lives with design.

Fab was founded by serial entrepreneur Jason Goldberg in February 2011 and launched on June 9, 2011. Fab’s founders are Bradford Shellhammer, Nishith Shah and Deepa Shah. Fab’s headquarters are in New York. The company also has offices in Berlin, London and Pune.

Over 6 million people around the world use Fab todiscover everyday design products at great prices, to connect with the world’s most exciting designers, and toshare their favorite design inspirations.





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JustFab ( is an online fashion styling service and
lifestyle fashion brand that offers members a fun and engaging personalized
shopping experience. Members of the fashion service are given the celebrity
treatment every month as they receive a customized selection of shoes and
handbags, handpicked by stylists, along with the JustFab basics of denim and
other fashion essentials. VIP members can purchase items for $39.95 and
shipping is always free.


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