LinkedIn's Reid Hoffman to Entrepreneurs: Raise More Money Than You Need In the new episode of 'Masters of Scale,' host Reid Hoffman chats with the founder of Eve and Minted about the importance of stocking the war chest with a lot of cash.

By Andrea Huspeni

Opinions expressed by Entrepreneur contributors are their own.


Editor's Note: In the new podcast Masters of Scale, LinkedIn co-founder and Greylock partner Reid Hoffman explores his philosophy on how to scale a business -- and at, entrepreneurs are responding with their own ideas and experiences on our hub. This week, we're discussing Hoffman's theory: you need to raise more money than you think you need — and potentially a lot more.

When Mariam Naficy launched her cosmetic company Eve in 1998 she never expected she'd be paying $50,000 to a 5-year-old girl for the domain.

Fortunately, Naficy had raised enough money to cover the cost. In fact, in its first first year of existence Naficy raised $26 million to get her company Eve off the ground and prep it to scale.

Related: Check Out a New Podcast Hosted by Reid Hoffman -- And Join the Conversation on

"You have to plan, paradoxically, for the unknown. And that's the first reason you should raise more money than you think you need," says Reid Hoffman, who interviewed Naficy for the podcast Masters of Scale, a 10-episode series hosted by the LinkedIn co-founder and Greylock partner in which he offers an unconventional theory about scale and sets out to proves it through conversations with iconic entrepreneurs.

But not every entrepreneur agrees with that statement – or at least wants to admit to it. Raising money often means giving away equity and control, two things founders obsess over. Despite these concerns, Hoffman argues that because of entrepreneurship's twists and turns, it is imperative to have your war chest stocked with cash.

"Tech businesses absolutely need to raise more money than they think they'll need," he says in the podcast. "You'll need that capital for all of the unknown pivots, whether it's new customer needs or competitive attacks."

Related: Reid Hoffman: To Successfully Grow A Business, You Must 'Expect Chaos'

Naficy supports this belief, while another guest, Selina Tobaccowala of Evite, an online invitation site, cautions that entrepreneurs, can indeed raise too much.

"We took way too much capital. We took $37 million the end for online invitations. Like, it sounds crazy, it was crazy," she says on the podcast. "At the time, it was all about: Get the eyeballs. Put a billboard on [Highway] 101. Spend the capital. Hire, hire. The thing I've learned was: Make sure you have a strong business, and then scale it out. Make sure you have the right unit economics, make sure you have the right fundamentals. And there was no reason we should have taken so much capital."

For more anecdotes and lessons from Naficy and others, listen to the episode of this new series. Listeners can also access new episodes on Apple, Google, Stitcher and other streaming platforms.

Andrea Huspeni

Founder of This Dog's Life

Andrea Huspeni is the former special projects director at and the founder of This Dog's Life.

Editor's Pick

Related Topics

Business News

Opening a New McDonald's Franchise Will Be More Expensive in 2024

Starting January 1, franchise royalty fees will rise from 4% to 5% for new locations in the U.S. and Canada.

Business News

'Bar Tab Was Almost 80%': Restaurant Slams Well-Known Columnist After He Goes Viral For Claiming His Meal Cost $78

A photo of a burger and fries from 1911 Smokehouse BBQ at Newark Airport went viral for its alleged price, but the restaurant says the man didn't factor in his many alcoholic drinks.

Money & Finance

Want to Become a Millionaire? Follow Warren Buffett's 4 Rules.

Too many entrepreneurs are counting too heavily on a company exit for their eventual 'win.' Do this instead.

Business News

Here's the Secret to Growing Your Small Business, According to Execs at UPS, Airbnb, Mastercard, and Other Big Brands

These 10 executives work at big companies, overseeing programs that help small business. Here's the advice they wish all small business owners were getting.

Business News

Is Your Relationship With Your Work at a Breaking Point? You're Not Alone, Survey Finds

In a new survey by HP, 83% of unhappy workers said they are willing to earn less to be happier at their job.

Business News

'An Absolute Prize': Rare Great Depression $10,000 Bill Sells For Nearly $500,000

The $10,000 bill is from 1934 and was never in circulation.