Let's say you raise $40M and then a year later get a really great acquisition offer for $150M. That's most likely a veto. Your investor will want something more like $500M.
The problem there is that there are fewer buyers at $500M than there are buyers at $150M. And no business is guaranteed; it could be that the next year goes slow or the market takes a dip, and it's impossible to even get a $200M offer.
The founders have now been forced to pass on a "good" outcome because the investors wanted a "great" outcome. But great outcomes aren't available to everyone. Eventually the company spirals down, falls into obsolescence, cannot raise further funding, and is forced to firesale.
The investors don't care because this loss is built into their model and they have another dozen companies on the same LP. The founders really care, because that's all they do.
If all you need is $6M it's better to take $6M and keep as much control as you can, rather than take $40M and set yourself up for failure.
Depending on how that deal is structured - liquidation preferences, board seats, voting rights of the preferred stock (which the vcs would get), you're probably giving up some control here.
It also raises expectations that, well you got $40m to deploy, go out and do it and eat up all that market share.
This assumes that your product / market fit is not only super bulletproof and solid, but also that you've assessed every type of market up to your valuation (ie $200m worth of value) and have a go-to-market ready for each.
Ok let's say you even had some semblance of that - deploying GTM on each vertical at that speed puts pressure on the sales team to close aggressive deals. This means that some deals might not be 100% fit but maybe 90% fit. Well if you're expected to grow at 10x what you initially thought, those 10% inefficiencies start to stack.
Ok NOW product team is starting to feel the heat to accommodate for all these not 100% perfect fit deals. So what do you do? Start hiring people on product to try and keep up.
The problem with rapidly scaling growth, esp in enterprise, is that inefficiencies and edge case situations compound significantly at scale.
In frothy markets like right now, it's up to the founders to figure out the right amount of money because not enough can kill you but so can too much.
http://www.businessinsider.com/why-its-better-to-sell-a-star...
Compare Huffington Post and TechCrunch. Both sold to AOL at the same time. HP for $314M, TC for $30M. Michael Arrington walked away with 25% more money than Ariana Huffington despite selling for 1/10th the price.
The Parsely team could probably sell their company tomorrow for $50M if they wanted to and everyone would make money. If they raised that $40M that sale would be blocked. I'm sure the team has higher expectations, but they preserved their options. Smart move.
TL;DR Exit becomes harder You lose control Liquidation preference (a lot of people miss that)
This is my thinking too - take the money but don't deploy it any faster or less efficiently than you otherwise would have. If that means your runway is extended to 10-15yrs, great! You now have the ability weather potential economic downturns or GFC 2.0's or other unforeseeable existential problems, it's insurance. Investors may not jive with that, preferring you to fail fast/fail early, but if you can take that investment and keep control of the board, then it's at least worth serious consideration.
In this situation you don't get rich. You just get a salary for 10 years. That's not nothing, but if you've come this far, it's hardly the best outcome.
I was busily scoping out systems to automate stuff so that we could scale, but the impression I got was that the VCs were very very interested in seeing rapid expansion of head-count because that was an important metric for them.
I remember having these weird conversations with me saying 'we don't need to find a bigger office, if we get this workflow automated, we can just go down the pub while the money rolls in'. Ah to be young and naive.
That strongly depends on the investors. The vast majority is perfectly content with a spending schedule that runs over one or more years.
Why not just take the $40M if you can negotiate a strong position (which you can if you're willing to say no to it anyway) and just have more runway to protect yourself?