How I turned down 3.5 mil

I turned down $3.5 mil…

I usually avoid posting about something that didn’t or hasn't happened. Still, with how tough the investment market has been for several months I feel like this is something all founders need to hear especially if you’re raising capital.

Back In March, Nitrility successfully concluded what was anticipated to be our final pre-seed round led by Anush Amin. The team had already been planning our launch, so our focus naturally shifted to the seed round. The investment climate, particularly within the Web3 domain, presented formidable challenges, making traditional VC engagements naturally terrible.

However, our strategic advantage lay in our partnerships. With over 3,000 top-tier artists signed with Nitrility at the time, our network was both robust and influential. Within a span of months, we secured potential commitments amounting to $600k for our seed round, a testament to our artist community and the trust of key figures in the music industry.

I was still looking for a lead investor at the time and was soon approached by a VC firm deeply rooted in the Web3 space. They expressed interest in investing $3.5 million for a 10% stake, with an additional 5% earmarked for advisory shares. The downside? We would need to decline the initial $600k commitment. After months of negotiations, I made the decision to proceed. Regrettably, the terms shifted, with the VC firm now seeking a 35% equity and our 600k practically down the drain.

I turned it down. At the time it was an extremely difficult decision, but one that probably saved the company long term (only time will tell). Soon after, we raised another preseed round, putting us back in the green. The search still continues for a lead investor in our seed. If there’s one takeaway, it’s that founders choose their VCs, not the reverse. No matter how alluring the financial offer looks, its value is only tied to the integrity and vision of the individual or firm behind it. Numbers should never be a priority…