Office Hours Column: How (and Why) to Raise Later-Stage Capital

Spencer Rascoff

Spencer Rascoff serves as executive chairman of dot.LA. He is an entrepreneur and company leader who co-founded Zillow, Hotwire, dot.LA, Pacaso and Supernova, and who served as Zillow's CEO for a decade. During Spencer's time as CEO, Zillow won dozens of "best places to work" awards as it grew to over 4,500 employees, $3 billion in revenue, and $10 billion in market capitalization. Prior to Zillow, Spencer co-founded and was VP Corporate Development of Hotwire, which was sold to Expedia for $685 million in 2003. Through his startup studio and venture capital firm, 75 & Sunny, Spencer is an active angel investor in over 100 companies and is incubating several more.

Office Hours Column: How (and Why) to Raise Later-Stage Capital

I’ve seen my fair share of funding rounds, both as a founder and investor. And at the risk of stating the obvious, it's clear most startups need funding to succeed.

Even the most brilliant businesses with amazing founder-idea fit will eventually hit a dead-end if they do not have (or run out of) money to support their venture. And the unfortunate reality is these dead-ends are much more common than successfully launching an IPO.

Luckily, there are paths in place for founders and new businesses to continue on their journey towards continued expansion and solvent success. And, unsurprisingly, when it comes to raising money for startups, I have a preference for venture capital.


Last month I offered advice on venture capital fundraising for your startup’s seed round - the logical (but often intimidating) first step in seeking capital outside of friends and family, supporters or your personal bootstrapped wallet.

So let’s assume your warm intro was well received, your pitch deck was a home run, the best term sheet has been secured and the first dollars from excited investors have begun to flow. The seed has been planted, and your business is sprouting. Now what?

Keep the Funding Flowing

The biggest piece of advice I give to the companies in my portfolio is: Raise more capital. Raise it now if you can. And raise as much as possible. Bill Gurley from Benchmark Capital was on my Board at Zillow for a decade and consistently gave us great advice on this topic – imagine Bill’s baritone Texas drawl: “the time to eat the hors d’oeuvres is when they are being passed.” As usual, Bill is right.

With competitive markets (as so many are) and firms eager to invest, the time is ripe to secure additional capital. Raise as much as you can in your seed round, or water the seed with a Series A round to ensure your company’s ability to grow, compete and adapt if necessary.

I met with a founder the other day that recently emerged from an L.A. seed-stage startup accelerator with a solid $4M round. They told me they were not planning on raising again for at least another year. I immediately advised them to raise a Series A right away. The company is in a very competitive space, and if they did not raise the capital, their competitors would.

Another founder I spoke with had bootstrapped their way to a successful business venture and was already turning a profit through building software tools for small businesses. They had no intention of securing additional capital. Again, another highly competitive market. And again, I encouraged them to raise more money.

I also spoke with a founder this week who had initially raised an impressive $5M in their seed round for their incredibly innovative product. However, they did not seek funding for additional capital. Unfortunately, that company is now reaching the end of its cash after having to pivot twice. The founder regretfully admitted to me that they wish they had raised more in their seed round or went on to a Series A. With that additional funding, the business would have had the opportunity to pivot a third or fourth time, potentially saving the company.

These additional raises (fresh off the initial funding successes) allow founders and startups the continued ability to compete in their respective markets - and, more importantly, allow for faster growth. You’ll be able to spend more on hiring the best team and invest more heavily in product, tech, sales and marketing. In competitive markets where the winner often takes most, this extra funding can help companies insulate themselves against competitors and get on the fast track to becoming an industry leader.

And if the sheer number of Series A rounds and average amounts raised in 2021 is any indication - then the time is indeed now to raise.

Lean into the Momentum

There’s an interesting and continued phenomenon in venture capital investing right now - and it all comes down to momentum.

For example - I recently spoke with a company that had raised $100M at a $1B valuation. Only 6 months later, they raised an additional $300M at a $3B valuation.

The massive amounts of money and the rate at which it is being raised is amazing and unprecedented. And I predict it’s only going to get bigger and more rapid. (I’ll write in more detail about this in an upcoming article, but because VC returns have been so incredible over the last 20 years - institutional investors are now allocating more of their funds towards this type of investment. This trend is creating larger round sizes and higher valuations.)

Additionally, a comparison can be made between these late-stage funding environments and momentum trades. Venture capital is essentially a type of growth investing - and once the momentum starts building, the investors are not necessarily basing investment strictly on the analysis of the business’s fundamentals - but rather the potential future returns.

The same momentum is seen in these later-stage funding rounds, where investors - motivated by the fear of missing out and the potential of high returns - continue to push the amounts raised and valuations higher and higher.

All this is to say, startups should only raise this additional capital if they have a solid plan with what to do with it. There are reasons when raising too much capital can have downsides, including reducing the likelihood of exit offers, normalizing inefficiencies within the company (if you are solely dependent on cash - you may spend too much too soon or less effectively), and the downfalls of a down round. You should not raise the money just for the sake of having a large valuation and lots of cash in the bank. Only raise the money if you have a clear allocation plan.

For founders with a plan who are pulling out all the stops to ensure success, don’t shy away from the momentum and opportunity right now to raise more capital. A common expression in startups is “always be recruiting.” I agree, and I’d add another good aphorism: “always be fundraising.”

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Wonder Dynamics: Redefining the Animation Landscape
Wonder Animation

🔦 Spotlight

Happy Friday, LA!

Wonder Dynamics, a Los Angeles-based company founded by Tye Sheridan and Nikola Todorovic, has launched Wonder Animation, a beta feature that is poised to transform the landscape of video production. Acquired by Autodesk in May, Wonder Dynamics is leveraging this innovative tool, which harnesses artificial intelligence to turn standard video footage into captivating 3D animated scenes, making sophisticated animation techniques more accessible to filmmakers of all budgets.

Wonder Animation allows creators to shoot from multiple angles, with the AI reconstructing these shots into a dynamic 3D space. This functionality enables filmmakers to seamlessly blend live-action scenes with interactive virtual environments while preserving original camera movements. Users can customize various aspects, including animations, characters, lighting, and camera tracking data, and the tool integrates smoothly with popular software like Maya, Blender, and Unreal Engine.

What sets Wonder Animation apart is its emphasis on artistic control. Unlike many AI tools that impose rigid outcomes, this feature empowers creators to guide their projects, ensuring that their unique style remains front and center.

As the boundary between video and 3D animation blurs, Wonder Animation invites creators to experiment and innovate in exciting ways. This development marks a significant step forward in digital storytelling, democratizing access to high-quality visual effects and making sophisticated animation achievable for a broader range of filmmakers.

With the global animation market projected to reach approximately $400 billion in 2024 and grow to over $587 billion by 2030—reflecting a compound annual growth rate (CAGR) of about 5%—tools like Wonder Animation are more relevant than ever. This growth underscores the increasing demand for animated content and highlights the necessity of innovative solutions to meet filmmakers’ evolving needs. For those looking to elevate their storytelling, Wonder Animation may just be the key to unlocking new creative horizons. According to Statista, this upward trend in the animation market emphasizes the significant opportunities ahead.


🤝 Venture Deals

LA Companies

  • Evite, an online platform enabling users to design, send, and manage digital invitations and eCards with tools for event organization and guest tracking, has received a strategic growth investment from Francisco Partners to accelerate innovation and expand its product offerings. - learn more
LA Venture Funds
  • F4 Fund participated in a $4.1M Pre-Seed funding round for Further, a platform designed to help first-time homebuyers determine how much home they can afford by providing personalized insights on interest rates and lender requirements, giving users a clear view of their purchasing power. - learn more
  • Alexandria Venture Investments participated in a $10M Seed funding round for CrossBridge Bio, a company focused on developing advanced dual-payload antibody-drug conjugate (ADC) therapies, with the funds supporting preclinical development of its next-generation cancer treatments. - learn more
  • Clocktower Ventures participated in a $5.6M Series A funding round for Morada Uno, a startup in Mexico focused on making apartment rentals easier by providing a platform that connects tenants with landlords and simplifies processes like lease agreements and rent payments. - learn more
  • Skyview Capital participated in a $5M Series A funding round for Web3 chain game A-World, a tower defense battle game set in the metaverse on the BNB Chain, where players build hero towers to defeat waves of monsters. - learn more

      LA Exits

      • Drive Hospitality, a leading provider of personalized parking and hospitality services, including valet, concierge, bell services, parking management, and advanced technology integration, has been acquired by Propark Mobility. - learn more
      • Vebu Labs, located in El Segundo and specializing in custom automation solutions for the food industry—including the innovative 'Autocado' system that automates the peeling, coring, and scooping of avocados to enhance operational efficiency—will be acquired by Serve Robotics. - learn more

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            Big Wins: Dodgers Take the Title ⚾, ChatGPT Levels Up🚀

            🔦 Spotlight

            Happy Friday, LA! It’s been a week of big wins, on and off the field. 🎉

            ⚾️ First up, let’s talk Dodgers. With a thrilling 7-6 comeback victory over the Yankees in Game 5, the Dodgers clinched their eighth World Series title, their first since 2020. The city is buzzing, and fans are ready to celebrate! A parade kicks off this morning at 11 a.m., starting at City Hall and winding down to Flower Street, with a ticketed celebration at Dodger Stadium for those wanting to keep the festivities going.

            Image Source: Dodgers

            💻 Meanwhile, in the tech, OpenAI just rolled out a game-changing update for ChatGPT. Plus and Enterprise users can now access real-time internet search, powered by Microsoft Bing, bringing ChatGPT's responses fully up-to-date. This means users can now ask about the latest news, hotspots, or recent LA startup announcements, and ChatGPT will pull in fresh, relevant answers directly from the web. Previously limited to information up to 2021, ChatGPT’s new browsing capabilities make it a valuable digital assistant for anyone needing real-time insights in fast-paced industries like tech and entertainment.

            Image Source: ChatGPT

            🔍 The real-time search feature also includes “Browse with Bing,” allowing ChatGPT to source information from multiple sites for detailed answers to complex questions. Whether you’re exploring the latest venture capital trends in LA or curious about the best local spots, ChatGPT’s new browsing power helps you stay ahead with the latest info. This leap forward in AI functionality makes ChatGPT even more versatile and powerful for everyone, from business owners to everyday users.

            From the Dodgers’ World Series win to OpenAI’s latest ChatGPT update, there’s a lot to celebrate in LA this week. Here’s to champions, innovation, and a city that’s always pushing boundaries. 🌆✨


            🤝 Venture Deals

            LA Companies

            • Final Boss Sour, a Los Angeles-based gaming-themed snack company specializing in healthier sour snacks, has raised a $3M Seed funding round led by Science Inc. to expand its product offerings and operational capabilities. - learn more
            LA Venture Funds
            • Smash Capital led a $50M Series B round for Read AI, a productivity-focused AI company, bringing its total funding to $81M. The company offers a platform that enhances meeting efficiency through features like note-taking, summarization, and transcription. Additionally, Read AI introduced "Read AI for Gmail," a free Chrome extension that integrates information from various applications, reducing the need to switch between apps. The funds will be used to increase the company's headcount in engineering, data science, and business teams. - learn more
            • Distributed Global participated in a $25M funding round for Nillion, a company that provides decentralized privacy solutions designed to secure sensitive data using advanced technologies like secure multi-party computation. - learn more
            • Act One Ventures participated in a $5M Seed funding round for Latii, a construction materials supply chain startup, to enhance its platform that connects contractors with suppliers, aiming to streamline procurement processes and reduce costs in the construction industry. - learn more
            • SmartGateVC participated in a pre-seed funding round for Ritual Dental, a company revolutionizing dental care by integrating advanced technology and microbiome science to provide personalized, preventive treatments. - learn more

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                Billion-Dollar Milestones and Snapchat’s New Features

                🔦 Spotlight

                Happy Friday Los Angeles!

                This week’s spotlight showcases LA’s thriving tech scene, featuring Snapchat’s latest feature updates and two local startups Liquid Death and Altruist, making TechCrunch’s Unicorn List for 2024.

                Image Source: Snap

                Snapchat’s recent fall updates bring fresh features, including a new iPhone camera shortcut for instant snaps, Halloween-inspired AI-powered Lenses, and Bitmoji costumes inspired by Mean Girls and Yellowstone. Bitmoji stickers now reflect trending Gen-Z expressions like “slay” and heart symbols for added flair in chats. Plus, the “Footsteps” feature on Snap Map allows users to track their past adventures privately, adding a nostalgic touch.

                Image Source: Liquid Death

                ICYMI, two LA startups joined the Unicorn Club—achieving valuations over $1 billion. Liquid Death, based in Santa Monica, is a canned water company with edgy branding and a humorous sustainability focus. Known for viral marketing and brand partnerships, it redefines bottled water as a lifestyle brand and environmental statement. In March, Liquid Death closed $67 million in strategic financing, raising its total funding to over $267 million and valuing it at $1.4 billion.

                Image Source: Altruist

                Altruist, a Culver City-based fintech platform, offers financial advisors streamlined tools to better serve their clients. With a user-friendly investment and account management platform, Altruist has gained strong traction in the finance world. In May, it announced a $169 million Series E funding round, bringing its total funding to over $449 million and earning a valuation of $1.5 billion.

                Together, Liquid Death and Altruist exemplify LA’s capacity for innovation across diverse sectors, from lifestyle branding to fintech. Whether reshaping financial tools or redefining sustainable branding, these companies showcase LA’s unique entrepreneurial spirit. Go LA!

                Check out TechCrunch’s 2024 Unicorn List here. And don’t miss Snapchat’s latest features—perfect for adding some fun, connection and maybe a few selfies this weekend!


                🤝 Venture Deals

                LA Companies

                • Freeform, a company bringing AI to metal 3D printing, raised $14M in funding from NVIDIA’s NVentures and AE Ventures to further develop its AI-powered 3D printing technology for industrial-scale production. - learn more
                LA Venture Funds
                • Anthos Capital participated in a $70M Series D round for Carbon Robotics, which develops AI-powered robotics for precision agriculture, and the funding will be used to accelerate the growth of its autonomous weeding technology. - learn more
                • Anthos Capital participated in a $3.5M seed round for Plasma Network, aimed at expanding access to USDT stablecoins on the Bitcoin network, with the investment supporting the network’s growth and efforts to enhance stablecoin accessibility through the Lightning Network. - learn more

                LA Exits


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