Raising Multiple Rounds Of Venture Capital Might Be Wrong For Your Startup

There’s a mostly accepted book successful Silicon Valley: Identify a startup idea. Sell a chunk of your institution to raise task capital. Make sales. Raise much task capital, and make much sales. Repeat until nan institution goes public, aliases gets acquired, hopefully for billions either way.

But what if you didn’t get connected a fundraising treadmill aft taking a first round? What if you system your institution to sprint to profitability done slower, sustainable growth, alternatively than nan reverse — unprofitable maturation — arsenic truthful galore VC-backed companies do? 

That’s nan mobility that Pukar Hamal, laminitis and CEO of SecurityPal AI, asked himself aft raising a $21 cardinal bid A information successful 2021 and, a twelvemonth later, almost moving retired of money. The information was led by David Sacks’s Craft Ventures, pinch information from Andreessen Horowitz’s Martin Casado and Okta co-founder Frederic Kerrest.

“I started nan institution backmost successful March of 2020. It’s my 2nd institution that I founded,” he said on TechCrunch’s Equity podcast this week.

His erstwhile company, which sold via an acqui-hire, had raised its first superior earlier merchandise marketplace fit, he said. That’s beautiful common. Founders often raise earlier they’ve sewage a merchandise that they cognize customers will salary good for.

In retrospect, Hamal described that determination arsenic his large “mistake.”

So for SecurityPal, he did nan reverse. He waited until nan institution deed $1 cardinal ARR, which took astir a year, and past did his first and only raise, nan Series A.

SecurityPal uses AI to velocity endeavor information owed diligence, which occurs successful each ample endeavor transaction erstwhile signing caller IT contracts. SecurityPal promises to shrink nan information reappraisal from months to days aliases moreover hours, helping companies to prevention money connected nan process while closing deals faster. It has big-name customers for illustration Airtable, Figma, LangChain, and Grammarly, among others.

But successful 2022, he faced a crisis. Interest rates roseate and collapsed nan task superior market. Raising much costs would beryllium tough. “We were burning a batch of capital,” he said. “We were, like, 14 months distant from moving retired of money.”

It was a wake-up call. Hamal had to drastically trim expenses, which meant a large layoff. That was truthful painful, he said, that he vowed to do things differently. “We extended our runway, and we tried to thrust nan institution towards rate travel break even, rate travel affirmative profitability,” he said.

Although successful 2025 VC money is flowing again, particularly for AI startups, “we haven’t raised different round,” he said. The reason? He sees now that VC money comes pinch its ain value tag.

“The much superior we raise, nan much expectations location are going to be, nan much we’re going to benignant of springiness up power of nan company, nan much unit we’re going to consciousness to conscionable prosecute a bunch of group that mightiness not activity out,” he said. 

“For task capital, what matters is growth,” he said. For immoderate investors, accelerated gross maturation is much important than improving gross margins, he said. 

That intends a institution tin autumn deeper successful nan reddish moreover arsenic it sells more. VCs spot that founders will fig retired profitability later. Until then, they tin support raising funds. And if they can’t, nan institution mightiness not survive.

Hamal wanted what he described arsenic “durable growth” for SecurityPal: slow and solid. If income were constricted to a fistful of deployments astatine immoderate fixed time, his squad could guarantee that each customers were good onboarded, moreover for their separator cases.

He didn’t want accelerated income only to person customers not usage nan merchandise and churn travel renewal time. “That communicative happens each nan clip because there’s truthful overmuch unit connected companies to grow,” he said.

On nan different hand, he said he recovered that slow ARR tin lead to “healthy gross margins, awesome rate collection.”

Hamal is clear that he’s not advocating against task capital. Other startups whitethorn person to support raising and chasing accelerated ARR. He’s not moreover ruling retired different information for SecurityPal. He conscionable wants much founders to deliberation astir nan slow-growth, nuanced alternatives.

“I raised task capital. And I haven’t raised it again because what I’m trying to do is put nan business successful a position wherever it doesn’t request task superior complete and complete again,” he said.

Listen to nan full speech connected nan Equity podcast, which includes Hamal’s suggestions connected really to find superior extracurricular of venture.