We took a down round instead of an acquisition offer. Eighteen months later the company closed.
An offer on the table at roughly half the last valuation, against a bridge at a 60% markdown. The reasoning was documented at the time. It did not survive contact with the following year.
The decision timeline
Three moments, kept separate. What became known later sits in its own column so it cannot be read back into the reasoning.
Known at the time
- Eleven months of runway, growth down from 90% to 22%
- Net revenue retention at 96%, down from 118% over eighteen months
- An offer at roughly half the last valuation, 60% of it in a three-year earn-out
- A bridge available at a 60% markdown with full-ratchet anti-dilution
Decided, and why
- Declined the offer, because the earn-out structure made the realisable value far lower than the headline
- Took the bridge, because it preserved the option to sell later from a stronger position
- Cut burn 30% rather than the 50% the middle scenario called for, to protect the growth story
Known later
- Retention was structural, not cyclical — it fell to 84%
Members see the full outcome.
Trust and provenance
What we checked, and what we did not.
The decision context
| Problem | Eleven months of runway, growth down from 90% to 22% year on year, and an unsolicited acquisition offer from a strategic buyer. Existing investors offered a bridge at a steep markdown instead. |
|---|---|
| Deadline | The acquisition offer carried a four-week exclusivity request. |
| Stakes | Existential |
| Decision-maker | Board decision. Two founders, three investor directors, one independent. |
Constraints
| Budget | Eleven months of runway at the then-current burn; seven if hiring continued as planned. |
|---|---|
| Time | Four weeks to respond to exclusivity. |
| Information | The buyer would not share integration plans before exclusivity. Retention terms for the team were indicative only. |
| Authority | Founders held a blocking position on a sale but not on a financing. |
| External | Two comparable companies had sold that quarter at lower multiples, which both sides read differently. |
Alternatives
Options considered, and the stated reason each rejected option was rejected.
Evidence, reasoning and outcome
The remaining six field groups — evidence, reasoning, action, outcome, reflection and transferability — are available to members.
- Eighteen months of cohort retention data showing net revenue retention falling from 118% to 96%
- A term sheet with an indicative earn-out structure
- Expected value to common shareholders, including the team
Read the rest of this case
Membership opens the full library: the evidence available at the time, the decision criteria, the measured outcome and what the creator would do differently.
Prices and terms are shown in full before you pay. Cancel any time.
Rights and licensing
Published terms for this case.
| Consent | Creator confirms permission to publish. Other parties to the decision have not reviewed this account. |
|---|---|
| Licence | Non-exclusive, perpetual licence to publish and monetise. |
| Anonymisation | Company, investors and buyer redacted. Financial figures expressed as percentages only. |
| Compensation | Eligible for the creator revenue pool under the published allocation rule. |
Think something here is wrong? Request a correction or takedown.
Related decisions
Matched on decision type, industry, stakes and shared tags.
One senior engineer or two juniors on the same budget
A Series B team with one open requisition and a delivery commitment eight months out. The decision turned on who would do the mentoring, and that question had no good answer.
Rewriting the billing system instead of patching it for another year
The estimate was five months. It took nine. Whether that counts as a failure depends entirely on what the patching path would have cost, and that number is unknowable.
We ended the contract with the client that was 41% of our revenue
No board, no runway, no second opinion. The decision took eight months to execute and the replacement revenue arrived four months later than the plan assumed.