Author Archives →

Why Startup Accelerators Compete with Smart Money

TL;DR: As the smartest VC money has continued moving earlier-stage, its value proposition for early checks starts to resemble what’s offered by high-priced startup accelerators: signals, coaching, and a network. That means elite early-stage VCs and accelerators can be substitutes, and the accelerators know this. This may lead the latter to recommend financing strategies to entrepreneurs that, from the perspective of the startup can be counterproductive, but enhance the market power of the accelerator relative to investors who can offer similar resources at better “prices” (valuations). Entrepreneurs should understand the power games everyone is playing, and become beholden to no one.

Related reading:

First, a few clarifications on definitions. When I speak of “smart money” in the VC context I’m referring to investors who bring much more to the table, in terms of useful resources and connections, than simply raw cash. They often bring an elite brand that serves as a valuable signal in the market (which itself raises valuations and helps with follow-on funding), credible insight and coaching that they can use to help founders and Boards of Directors, and a network that they can tap into for helping companies find talent and connect with commercial partners.

Classifying some money as “smart money” doesn’t necessarily mean that any money that isn’t “smart” must be stupid in a classic sense. It just means that the other money isn’t useful other than to pay for things. So in short, “smart money” refers to value-add investors who can do a lot more for a company than simply write a check; while “dumb money” means investors willing to pay very high valuations because they are simply happy to get access to this deal at all, and have very little else to offer beyond money itself.

Another clarification: for purposes of this topic, I am referring to high-cost, high-touch startup accelerators; meaning the traditional kind who “charge” 7-10% of equity and put in significant resources into programming, education, nurturing their network, etc. As I’ve written before, various organic market dynamics that are eroding the value proposition of traditional accelerators (see above-linked post) have produced a new “lean” form of accelerator that has dialed back its proposition, and reduced its “price” to 1-2% of equity. That latter kind of accelerator is not part of this discussion, because they behave very differently, and interact with smart money very differently.

Ok, so now to the main point. “Smart” very early-stage money (seed and pre-seed) can be viewed as a bundle of a few things:

  • Green cash money
  • Signaling and Branding – simply by being publicly associated with them, raising follow-on money, and getting meetings with other key players, will become dramatically easier.
  • Coaching – they’ve seen lots of successful (and failed) companies, and can provide valuable coaching to entrepreneurs.
  • A network – they’ve built a rolodex/LinkedIn network of lots of talented people that they are heavily incentivized to make available to you.

Now, let’s compare that bundle to the value proposition of traditional accelerators:

  • Signaling and branding
  • Coaching
  • A network

See the overlap? Startup accelerators are basically a service provider whose core service is the above bundle. In exchange for equity and the right to a portion of your funding rounds, their “service” is that they’ll (i) apply a brand on your company that makes it (at least for the good accelerators) easier to access money, (ii) provide you some coaching and education, and (iii) share their network with you.

The core value proposition of early smart money can be effectively the same as an accelerator: a brand to leverage in networking and fundraising, coaching, and a network to navigate. Accelerators and smart early money are, therefore, substitutes; and substitutes inevitably compete with each other. Some might argue that the “programming” (the educational content) of accelerators is a key differentiator, but realistically the smartest entrepreneurs aren’t joining accelerators to get an education. They’re joining for the brand, the network, and to make it easier to find more money and talent; all of which entering the portfolio of a resource-rich and well-respected early stage investor can provide.

The earlier in a company’s life cycle that smart money is willing to go for their pipelines (and many smart funds are going very early), the more startup accelerators will find themselves competing with lots of market players offering a very similar bundle of services. Given that smart early money can challenge the value proposition of accelerators, aggressive accelerators are incentivized to, in subtle ways, push startups away from smart very early-stage money and toward dumber money, because it increases a startup’s dependency on the accelerator’s resources, and therefore helps justify the accelerator’s cost.

How does this fact – that aggressive, elite startup accelerators want to cut off smart early-stage money from competing with them – play out in the real market? Some of the ways I’ve already described in Startup Accelerators and Ecosystem Gatekeeping, but I’ll elaborate here.

Demo Day – Aggressive accelerators can push entrepreneurs to not do any fundraising other than through channels that the accelerator can control, like Demo Day, and then they can restrict access to Demo Day to investors who serve the interests of the accelerator (don’t compete with it). As I’ve written before, it is not in startups’ interests to restrict their fundraising activities solely to channels that accelerators can influence (because it allows accelerators to serve as rent-seeking gatekeepers). Many accelerators aggressively restrict how their cohorts are able to fundraise, enhancing the accelerators’ market power relative to VCs.

Fundraising Processes that Select Against Smart Money – One thing that’s been interesting to observe in the market is how entrepreneurs who go through certain accelerators are much more likely to emerge with a view that early-stage venture capital has largely been commoditized. If you think that all early money is the same, and all that matters is getting the best economic terms possible, you are going to approach fundraising in a very different way from someone who better appreciates the very subtle, human-oriented dynamics of connecting with value-add (smart) lead investors. “Party rounds” where entrepreneurs don’t allow anyone to serve as the lead are a very visible manifestation of this.

Entrepreneurs who treat fundraising as a kind of auction process, where you amplify FOMO and aggressively get the money to compete for the best price, are often creating a fundraising system that much of the smartest money will simply opt out of. Quality smart money players are looking to build long-term relationships, and that takes time. Their resource-intensive approach to investing also requires building meaningful positions on a cap table; a slot in a party round won’t work.

Elite value-add VCs know that they bring much more to the table than a random investor willing to pay a high valuation, and so the end-product of a hyper-competitive fundraising process that forces them to compete with a swarm of dumb money simply isn’t worth their time. The valuation will be too high, and their allocation on the cap table too low.

Aggressive accelerators know this, and it’s why they often nudge founders toward engaging in these kinds of hyper-competitive fundraising processes that push out smart money, because by removing other “smart” early market players with their own networks and brands, the accelerators enhance the relative value of their own network. The strategy is to marginalize any potential substitutes, so startups see the accelerator and its own network as the only “smart” player they need.

If you, as a founder, have come to believe that value-add VCs – who can deliver A LOT more value than simply cash – don’t exist, you may have fallen for a lot of the propaganda on social media pushed by traditional accelerators and the “dumb money” funds affiliated with them. Value-add VCs most definitely exist, and founders who’ve raised from them will say they’re worth their weight in gold. Accelerators may spin a story as to why it’s in founders’ best interests to be hyper-aggressive with their fundraising, and alienate many value-add VCs in the process, but startups need to understand this is driven far more by what’s in the accelerator’s interests than the startup’s.

It’s also worth pointing out the irony in certain accelerators telling founders that they should maximize valuations and minimize dilution in fundraising, while the same accelerators keep their own admission prices (valuations) fixed; and in the case of accelerators who’ve moved to post-money SAFEs, the price has actually gone up. If the market has become flooded with early-stage capital and signaling alternatives, should accelerators themselves not be subject to market forces?

I’m not an investor, nor do I even represent investors. I’m a lawyer who represents companies, including in lots of financing rounds. Read my lips: relationships matter, and smart relationship-oriented money can really make a difference. Want to know what a possible end-result is of startups pursuing a naive, hyper-competitive, relationship ignorant fundraising strategy that treats getting a high valuation as the only goal; long-term relationships and “value add” VCs be damned? Failed unicorns (getting SoftBanked) and thousands of employees burned because people guiding the company in the earliest days were just lottery-ticket chasers instead of smart players who know how to build viable businesses. Treat investors like it’s all just about numbers, and you’ll inevitably surround yourself with people for whom you are just a number.

As I’ve written many times before, it’s extremely important that new entrepreneurs entering startup ecosystems understand the power dynamics operating in the background. See Relationships and Power in Startup Ecosystems. Different market actors compete for access and control over pipelines of entrepreneurs; and they “trade” access to deals with people who serve their interests. Startups are much better served when they are in the driver’s seat for what relationships they build in the market, as opposed to allowing repeat players (like accelerators or VC funds) to trade access to them as currency. Don’t let your company become a pawn in another power player’s game.

The smartest investors in the market have realized that outsourcing their business development to a handful of “sorters” (accelerators) is a losing strategy, because those sorters have their own agendas. One of those agendas is to make the earliest money in the market “dumber,” so that the accelerators can continue giving startups $125K for 7-10% of their cap table (which translates to as low as a $1.25 million valuation) when many smart early funds would offer multiples of that. It is an own-goal for founders to help accelerators do this.

Scout programs, pre-seed funding, exclusive “meet and greet” events, open “application” processes for intro meetings, and many other activities are ways in which smart money is moving earlier in the startup life cycle, to find early startups that they can “accelerate” themselves. That can be useful to founders, saving them both time and equity. Competition with accelerators is why most elite VCs no longer require warm intros. 

All of these ecosystem players are here, in one way or another, to make money; endless PR about friendliness, “positive sum” thinking, and saving the whales notwithstanding. Frankly, so are you, and so am I. The more they can cut off competition, the more money they can extract from the market that would otherwise go to entrepreneurs and their employees. That means the most logical strategy is: become beholden to no one. Nothing better ensures good behavior by your business relationships than a little optionality.

That does not mean treating everyone as a means to an end, nor does it mean preventing serious VCs from taking lead positions on your cap table. To the contrary, it means slowing down and building a diverse set of long-term and durable relationships, with a mix of value-add and “dumb,” that you can leverage toward your company’s goals. The emphasis, however, is on the diversity of your relationships, so no particular group has more leverage than is justified. Diversify your network.

Let everyone offer their service, but don’t naively become over-dependent on any single channel. If you have access to smart early money, take it, nurture that relationship, and respect the fact that smart money deserves a better price than party round “dumb” checks. Just don’t agree to any terms that cut you off from raising from alternative money later if it makes sense. Independent counsel will help ensure that.

If you’re in an elite accelerator, fantastic. Use them. But don’t let them push you into myopic fundraising approaches that just increase their control over the market, which keeps their “prices” high relative to where the market should move. Keep connecting with smart money, and diversify your network. Understand that it’s in founders’ interests to not let a handful of very expensive accelerators cut off smart money from competing on the same playing field (the earliest checks); often at much better valuations.

Startups thrive best in actual ecosystems, where market players aren’t able to gain so much control that they start to “charge” more than their real value proposition justifies. Let the smart money and accelerators compete, and build your long-term relationships accordingly.

Note: a few examples of elite value-add VCs competing head-on with traditional accelerators include Sequoia Arc, a16z Start, Accel Atoms, as well as the Neo Accelerator, which “costs” less dilution than traditional accelerators. Examples of elite VCs who haven’t formed formal accelerators but invest very early (pre-Seed) include Nfx and First Round Capital. Many founders are finding that, after weighing all the factors, entering these kinds of pipelines or programs leads to substantially less dilution relative to going into a traditional accelerator (paying 7-10% in dilution for that) and then doing a seed round.

A Convertible Note Template for Startup Seed Rounds

TL;DR: We’ve created a publicly downloadable template for a seed convertible note (with useful footnotes), based on the template we’ve used hundreds of times in seed convertible note deals across the U.S. (outside of California). It can be downloaded here.

Note: If you’d like to discuss this template or Notes generally, try Office Hours.

Additional Note: this post references a pre-money valuation capped convertible note. For a post-money valuation capped note, see here.

Background reading:

I’ve written several posts on structuring seed rounds, and how for seed rounds on the smaller side ($250K-$1MM) convertible notes are by far the dominant instrument that we see across the country. When SAFEs had pre-money valuation caps, they gained quite a bit of traction in Silicon Valley and pockets of other markets, but outside of SV convertible notes were still the dominant convertible instrument. Now that YC has revised the SAFE to have harsher post-money valuation economics (see above linked post), we’re seeing SAFE utilization drop significantly, though it was never close to the “standard” to begin with; at least not outside of California. For most seed companies, convertible notes and equity are the main options. 

For rounds above $1-1.5MM+, equity (particularly seed equity) should be given strong consideration. We are also seeing more founders and investors who really prefer equity opting for seed equity docs for rounds as low as $500K. The point of this post isn’t to get into the nuances of convertibles v. equity. There’s a lot of literature out there on the topic, including here on SHL.

What this post is really about is that many people have written to me regarding the absence of a useable public convertible note template that lawyers and startups can leverage for seed deals; particularly startups outside of SV, which has very different norms and investor expectations from other markets.

Cooley actually has a solid convertible note available on their Cooley GO document generator. I’m a fan of Cooley GO. It has strong content. But as many readers know, there are inherent limitations to these automated doc generator tools; many of which law firms utilize more for marketing reasons (a kind of techie signaling) than actual day-to-day practical value for real clients closing real deals. Your seed docs often set the terms for issuing as much as 10-30% of your company’s capitalization, and the terms of your long-term relationship with your earliest supporters. Take the details seriously, and take advantage of the ability to flexibly modify things when it’s warranted.

The “move fast and mindlessly sign a template” approach has for some time been peddled by pockets of very clever and vocal investors, who know that pushing for speed is the easiest way to take advantage of inexperienced founders who don’t know what questions to ask. But the smartest teams always slow down enough to work with trusted advisors who can ensure the deal that gets signed makes sense for the context, and that the team really knows what they’re getting into. Taking that time can easily pay off 10-20x+ in terms of the improved cap table or governance position you get from a little tweaking. The investor trying to rush your deal isn’t really trying to save you legal fees. They’re trying to save themselves from having to negotiate, or justify the “asks” in their docs.

As a firm focused on smaller ecosystems that typically don’t get nearly as much air time in startup financing discussions as SV, I realized we’re well-positioned to offer non-SV founders a useful template for convertible notes. The fact that, to avoid conflicts of interest, we also don’t represent Tech VCs (trust me, many have asked, but it’s a hard policy) also allows us to speak with a somewhat unique level of impartiality on what companies should be accepting for their seed note deals. There are a lot of players in the startup ecosystem that love to use their microphones to push X or Y (air quotes) “standard” for startup financings, but more often than not their deep ties to certain investors should raise doubts among founders as to biases in their perspective. We’ve drafted this template from the perspective of independent company counsel. 

So here it is: A Convertible Note Template for Seed Rounds, with some useful footnotes for ways to flexibly tweak the note within deal norms. Publicly available for download.

A few additional, important points to keep in mind in using this note:

First, make sure that the lawyer(s) you are working with have deep (senior) experience in this area of law (emerging companies and vc, not just general corporate lawyers), and don’t have conflicts of interest with the people sitting across the table offering you money. When investors “recommend” a specific law firm they are “familiar” with they’re often trying to strip startup teams of crucial strategic advice. See: Checklist for Choosing a Startup Lawyer. Be very careful with firms that push this kind of work to paralegals or juniors, who inevitably work off of an inflexible script and won’t be able to tailor things for the context. You want experienced, trustworthy specialists; not shills or novices.

Second, be mature about maturity. You’re asking people to hand you money in a period of enormous uncertainty and risk, while getting very little protection upfront. As long as maturity is long enough to give you sufficient time to make things happen (2-3 yrs is what we are seeing), you shouldn’t run away from the most basic of accountability measures in your deal. Think about how bad of a signal it sends to investors if a 3 year deadline terrifies you.

Third, do not for a second think that, because you have a template in your hand, it somehow means you no longer need experienced advisors, like lawyers, to close on it. Template contracts don’t remove the need for lawyers any more than GitHub removes the need for developers. The template is a starting point, and the real expertise is in knowing which template to start from, and how to work with it for the unique context and parties involved. Experienced Startup Lawyers are incredibly useful “equalizers” when first-time entrepreneurs are negotiating with experienced money players. Don’t get played.

Fourth, pay very close attention to how the valuation cap works, particularly the denominator used for ultimately calculating the share price. We are seeing more openness among investors to “hardening” the denominator at closing, either with an actual capitalization number, or by clarifying that any changes to the option pool in a Series A won’t be included. These modifications make notes behave more like equity from a dilution standpoint, allowing more clarity around how much of the company is being given to the seed money.

Finally, don’t try to force this template on unwilling investors. It can irritate seasoned investors to no end to hear that they must use X template for a deal because some blog post, lawyer, or accelerator said so. There is no single “standard” for a seed round. There never has been, and never will be, because different companies are raising in different contexts with investors who have different priorities and expectations. We’ve used this form hundreds of times across the country, but that doesn’t mean there aren’t other perfectly reasonable ways to do seed deals.

Have a dialogue with your lead money, and use that dialogue to set expectations. See: Negotiation is Relationship Building. If they’re comfortable using this template, great. If they need a little extra language here or there, don’t make a huge fuss about it if your own advisors say it’s OK. And if they prefer another structure, like seed equity or even more robust equity docs, plenty of companies do that for their seed round and it goes perfectly fine, as long as you have experienced people monitoring the details.

If any experienced lawyers out there see areas of improvement for the template, feel free to ping me via e-mail.

Obligatory disclaimer: This template is being provided as an educational resource, and is intended to be utilized by experienced legal counsel with a full understanding of the context in which the template is being used. I am not responsible at all for the consequences of your utilization of this template. Good luck.

When Startup Law Firms Don’t Sell Legal Services

TL;DR: Law firms inflate their costs when, instead of selling legal services, they’re actually selling prestige, luxurious offices, fun social events, fundraising connections, and all kinds of other things that aren’t legal services. The emergence of the lean boutique ecosystem is driven by pragmatic clients who just want to pay for highly experienced and specialized legal counsel, not all of that “other stuff.”

Background reading: Startup Lawyers – Explained.

If you want to understand the economics of law firms down to its most essential form, including “emerging companies” law firms that play the startup game, you can look at it this way: the main “costs” of law firms are (a) lawyers/legal talent, and then (b) literally everything else.

Analyzing the direct compensation cost of lawyers/legal talent makes it clear why no serious law firm is ever “cheap.” Serious lawyers with the rare intellectual horse power and experience (Partners and senior lawyers, not juniors) to manage massive non-routine complexity while avoiding expensive “bugs” that can’t be fixed unilaterally (the way code can be), and who’ve gone through 3 years of an over-priced education (did I say that out loud?) costing over $200K all-in, do not work for middle class compensation. Especially not the Partners who keep the whole thing together and manage the highest-level issues.

The core cost of serious legal talent sets a hard floor on the bare minimum a law firm can charge just for delivering the A-players.  Firms lacking the credibility to charge above that floor simply can’t hire the right people, and therefore can’t safely manage the kind of legal work that the top-tier handles. Those firms I refer to, lovingly, as “B-players.” The best software developers don’t work for cheap, and neither do the best lawyers. Some firms try to play games by pushing clients to work mainly with juniors and paralegals in order to save on their compensation costs – called “de-skilling” in the professional world – but the smartest clients see what’s happening and don’t trust their most high-stakes, strategic legal matters to less-skilled people operating on checklists and scripts.

Analyzing the “everything else” in the typical law firm cost structure starts to highlight just why many law firms charge prices that are dramatically higher than the cost of their legal talent. Some law firms, including many who market themselves to startups, are actually selling many things other than legal services. Those “other things” include:

  • Prestige – “We represented Apple and Uber. Using us signals your intent to be the next Apple or Uber.”
  • Extremely expensive real estate (offices), where you can feel amazing about working with lawyers who have such great taste in architecture.
  • Extremely expensive marketing events where you can mingle with other “exclusive” people and signal how amazing you are for working with such prestigious lawyers with great taste in architecture.
  • Support staff who purportedly are there to hold your hand to fundraise, work on pitch decks, talk to investors, etc.
  • Other staff building and managing things that many clients simply don’t need.

How can some law firms charge $750+/hr, and yet at the end of the day only generate “comfortable” professional services margins – nothing remotely close to the kinds of margins that draw in VCs? After paying for their extremely expensive legal talent, they also pay for this “other stuff.” You might say that firms are being wasteful, but eliminating these costs is far easier said than done for the largest firms. At the very highest end of every market, clients expect an enormous amount of polish and velvet rope. Those law firms are status symbols. Ferrari law firms are effectively selling a luxury service, and it takes money to deliver a luxury experience.

When clients ask us what we mean at E/N by a “lean” boutique law firm, we point to the above list. Lean means not paying for all of that other stuff, because many pragmatic clients know they don’t need it from a law firm. What do clients hire us for? Legal services. Highly specialized emerging companies, commercial, and M&A legal services delivered by highly experienced legal talent. When clients peruse our bios, they understand very fast that this is not a roster of B-players. They want to hire that, and not:

Prestige? No client I work with has ever suffered from the delusion that they are the next Uber, and they therefore have no desire to embarrass themselves by trying to use a law firm to signal that they’re a Unicorn. See: Not Building a “Unicorn.”

High-end offices? Please. My clients don’t give two sh**s about what my office looks like, as long as I deliver the goods (legal services).

Fun events? There are enough startup events being thrown by enough people who actually know how to throw events. Too many, some might say. Hard pass.

Fundraising connections? We negotiate and close deals, and help clients avoid being taken advantage of by the money. But there are plenty of other people and resources in the market who are far better, and more cost/time-effective, at helping with the non-legal side of fundraising than a law firm. Smart entrepreneurs know that (i) relying on a law firm to connect you to money sends a really bad signal (paid intros are weak intros), and (ii) more often than not, law firms just connect you to other VCs that they themselves work for and have long-standing relationships with, which means dangerous conflicts of interest. See: How to avoid “captive” company counsel.

We’ve told our clients for some time that they shouldn’t ask us to connect them to investors, for the above reasons; and, remarkably, somehow they still find funding without a law firm holding their hand. Apparently there are other ways to get warm intros to investors than through a law firm. Who knew? Maybe someone should write a blog post (or 30) about it.

The law firm that is super close to your money (investors) is the last firm you want representing you in taking that money, because between you (a single company) and them (a fund with lots of deals/investments and connections) their loyalty will always be owned by an influential repeat money player. Law firms that over-play their connections to investors are unethically spinning a blatant conflict of interest into a marketing ploy, so you’ll ignore the fact that they’re not actually that good at what you should really be hiring them for: high-stakes legal.

Other staff? The other day I heard about a group of lawyers dropping millions of dollars building proprietary software, and after 2 years what do they have to show? Something that looks a whole lot like Clerky, Gust Launch, or Carta. My clients aren’t going to pay me to build something that I can buy for far less money from someone else. We sell legal services. We buy (not build) software. Try to run a professional services business like a VC-backed startup, and you’ll either burn enormous amounts of money, or never ever generate a profit for your Partners, which means you won’t actually have (real) Partners, so you’re a firm of B-players. There are no VC returns in high-end legal. The margins aren’t there. Math.

Do lean boutiques have overhead? Of course. It’s what makes them more scalable and coordinated than solo lawyers. Docusign (we’re paperless), Box (all of our clients get a Box folder to access their files), Knowledge and Project Management systems, and other off-the-shelf tech tools that smart law firms know how to integrate and use, all cost money; so do recruiting and training resources. But not that much. Any serious business has overhead, but boutiques focus on overhead actually required to deliver (guess what?) legal services; not “other stuff.”

I spend a good amount of my time talking to legal tech entrepreneurs, and adopting new tools into our firm. But I don’t burn our fees on rube goldberg tools that offer more techno-BS than actual value to our clients; and therefore aren’t worth their cost.  Come at me with some nonsense about how (air quotes) “machine learning” or analyzing the “data” in contracts (is it “big data” or smaller artisanal data?) is going to DISRUPT highly complex, highly contextualized legal services from top-tier lawyers, and the bucket of water I splash in your face will be ice cold.

That lean focus on not burning money on things that don’t directly promote our end-service is what allows us to take, just as an example, a Partner who was $750/hr in BigLaw and drop their rate to $425, without changing their aggregate compensation, and while allowing them to have far better work-life balance. A win-win for both lawyer and client.

On the work-life balance point, lawyers tend to become much more skeptical of the “other stuff” their firms are paying for once they realize that all the extra overhead is directly tied to why they have to work themselves into the ground (so many hours), instead of being able to go home at a reasonable hour. More overhead means a smaller % of fees going to the actual talent, which means that talent has to work far more hours to make their comp. Again, Math. Lawyers who care about their personal lives don’t tolerate their firms burning money on nonsense. This “rationalizing” (cutting out fat) in the legal market is producing a thriving ecosystem of lean, high-end boutique law firms in various specialties; of which we are one.

We have very close relationships to many lawyers in the “Ferrari” tier of big TechLaw, in many cases because we see them on deals. Most of them intuitively understand that we are not really competing with each other. The highest end unicorn-track clients able and willing to drop $800/hr for lawyers really do expect prestige, gorgeous offices, fun events, and all kinds of other miscellaneous things from their law firm. Ours don’t. We are really selling to different people. There is no way they could run their firm like ours, and there’s no way we could run our firm like theirs. The future of the legal market is a broad ecosystem of varying firm structures catering to a broad diversity of clients with different needs, expectations, and price-points.

Our clients are very pragmatic about what they’re building, and what they want from a law firm. They’re not unicorns or even aspiring unicorns, so they see no need to use law firms that manage billion-dollar deals and IPOs. Selling for $75MM, $150MM, or $250MM is a “win” for them. They also understand that it takes real money to get serious senior lawyers and Partners who can deliver specialized and experienced high-stakes legal services for a scaling tech company. They’re willing to pay for that, but not for “everything else.”