The Startup Playbook, 2nd Edition

Chapter 10Money—Getting It and Making It

I (Will) invested in Harmonix Music Systems (the creators of epic games like Rock Band and Guitar Hero among many others) when they were just a fledgling startup out of MIT's Media Lab. It's not that I had a great vision for what they'd become. I just liked the people and the underlying technology, which looked nothing like the future products that the company would produce.

Harmonix was one of those companies that appeared to most as an overnight success. In reality, success took over a decade to achieve. Before it became a unicorn, the company raised a lot of money through many equity offerings—that is, with the sale of shares in the company to a variety of institutional and angel investors. At times, it wasn't clear, at least to those of us investors on the periphery of the company, that the company would make it. Sometimes the capital seemed to arrive just in time to keep food on the teams' table.

Brilliantly, through multiple diving catches and many offerings, the company suffered very little dilution. The portion of the company that the founding team and the early investors had didn't decline much, as it ordinarily does through many rounds of funding. The company always communicated the value of what they were doing and earned higher valuations at each funding round.

The team accomplished this by nurturing investors along the way ...