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What we should be learning from the Stayzilla brouhaha

Only announce what you raise. Better yet, stop announcing.

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Vijay Anand | Tech in Asia
Only announce what you raise. Better yet, stop announcing.

When VC funds commit capital, they have this habit of committing a larger amount, and then putting conditions of release (what’s called a tranche). If the funding is tranched, and if you and the VC fund decide to make an announcement, only announce the amount that is being released. 

The fact that companies use fundraising announcements to build vendor and employee confidence, and then say that the amount never reached the account, is paramount to fraud. 

In May 2016, Stayzilla announced that they had raised $13.5 million from their investors. Insiders

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