Don’t be stupid by holding off on announcing your funding round

Danny Crichton

For those who have followed TechCrunch and/or me for a long time, you know that I like to harp on the fact that fewer and fewer startups are filing their Form Ds with the SEC, which discloses information about non-public equity rounds. In fact, the playbook has become so common in Silicon Valley and so widely requested by founders that we actually put together a guide on Extra Crunch on how to delay your filings.

How to delay your Form Ds (or not file them at all)


This slowdown in funding disclosures has become particularly acute over the past few weeks as the global pandemic around novel coronavirus has continued to expand. Startups are holding off on their funding announcements, worried that their big news is going to get washed away in the flood of coronavirus stories. That’s a legitimate PR strategy, in the sense that you don’t want to announce big stories when other news might draw every reader’s attention.

Let me say it directly though: That’s a dumb strategy.

And here’s why.

First and foremost, the single-most important signal you can send to your investors, employees, customers and anyone else involved with your startup right now is that you are 1) open for business, 2) secure financially and 3) ready to continue to grow (or at least survive) despite the adverse events of the past few weeks.

There is no greater tool you have to make that argument than showing the world that you have capital on the balance sheet.

Earlier this week I wrote about HashiCorp, which offers a suite of cloud infrastructure products. They announced a $175 million growth round at a greater than $5 billion valuation. That’s huge news for any startup — they have reached semi-decacorn status. And yes, there may have been a slight tinge of snark in my tone, mostly about how that valuation is wildly out-of-sync with the public markets today.

HashiCorp soars above $5B valuation in new $175M venture round


But imagine being a customer or employee of HashiCorp right now. You’re worried about your job, or this critical tool that’s running your cloud systems. How do you feel when you hear that the company has adequate funding to help sustain itself during this moment of crisis? A sense of relief, and the desire to move your attention to other companies that may be closer to extinction.

This sort of signal is just as important for growth companies to send out as it is for early-stage startups. Everyone is worried about their jobs and what the looming economic depression is going to mean for them. Showing that you have capital, and even better, perhaps a path to sustainable positive cash flow, is going to do a lot to bring cortisol levels down to more manageable levels.

That’s the key reason to post that funding announcement, but there are others. The discussion around the pandemic isn’t going anywhere, anytime soon. It’s here to stay, hopefully not permanently, but we don’t even know that yet. There is not going to be some magical opportunity coming up here where there is going to be an open window in the news cycle where you can get a monopoly on people’s attention. And even if there were such a window, there are hundreds of other companies that are going to try to take advantage of that same moment as well.

This morning, with none of the fanfare we have come to expect, Apple introduced new iPad Pros, new Mac Minis and new MacBook Airs essentially by press release. If even the PR magicians at Apple have decided to just move on with their business and have given up all their alluring presentations and rollouts in favor of text in a document, you can too. Apple’s retail stores are closed everywhere except China. You can’t even go and see the damn products, and yet, they got those announcements out there.

The disappearing Form D


Finally, and this is thinking a bit more selflessly so apologies to some founders who aren’t used to that, but your funding announcement can offer a positive externality in a marketplace that is feverishly waiting to hear upbeat news around venture capital. Yes, most of these fundings were probably concluded well before the outbreak of COVID-19. Who cares? Showing that there is money flowing in the system gives other entrepreneurs and also VC investors the confidence that our capital system is robust and that firms really are open for business.

VCs have said they are open, and I have written that they are, with some caveats. But let’s actually see some damn evidence rather than the usual online blandishments.

So if you are waiting on the right window for announcing a previous round, don’t. Get it out there, and send a positive signal to your own employees, customers, other founders and the world that we are all in this together, and we can get through this crisis.

And then as always, get back to work, because there is a hell of a lot of other stuff to worry about than your PR strategy.