New York Knicks superstar Jalen Brunson and I do not have much in common. He can score 32 points a night in the playoffs. I cannot. But we have both faced a version of the same decision: whether to maximize the dollar number in front of us, or leave something on the table to improve the odds of winning later. For Brunson, that meant taking less than he could have earned from the Knicks in his 2024 contract. For me, as a founder raising capital for Ellevation, it meant not pushing overly aggressively on valuation and focusing on other deal terms that could prove more important over the long term.
On Saturday June 13, 2026, the New York Knicks won their first championship in 53 years. Their historic run captivated the country and sent the people of New York into a frenzy. Jalen Brunson averaged over 32 points a game in the playoffs, and is only one of four players in NBA history to score 45 points or more in a championship-clinching game.
Interestingly, a choice he made a few years earlier contributed to this championship as much as his performance during the playoffs. Brunson made a decision during a “round of funding” that proved prescient, offering a valuable lesson for founders on how to approach raising capital. Let me explain.
Brunson signed a four-year contract worth $104 million with the Knicks in 2022. Rather than waiting until he became eligible for free agency in 2026, he agreed in 2024 to a $156.6 million contract extension. By signing early, he gave up the opportunity to pursue what was expected to be a five-year deal worth as much as $269 million. In effect, he left $113 million on the table, giving the Knicks the salary cap flexibility to add players needed to compete for a championship.
In other words, Brunson chose to focus on team, talent, and culture rather than maximize short-term individual wealth, a decision that contributed both to winning and perhaps greater wealth generation over the long term now that he is a champion.
As the New York Times wrote:
Brunson, though, couldn’t be at the top of the hill without the likes of Josh Hart, Karl-Anthony Towns, OG Anunoby and Mikal Bridges. The Knicks were a well-oiled machine these playoffs, packed with pick-your-poison offensive weapons and slap-the-floor defensive dawgs. Yet, this Knicks starting lineup wouldn’t have been possible without Brunson’s selflessness.
His decision enabled “the Knicks front office to be able to build a true contender, to add the perfect pieces around its perfect star.”
I love this story. We need more stars like Brunson (in sports and beyond).
Founders who are interested in building great businesses and winning in the long-term should consider taking a page from Jalen Brunson's playbook. Brunson made a decision that helped him and the Knicks win the fourth quarter and ultimately, the championship; founders that optimize primarily for valuation during an early round of funding may appear to be winning the first quarter only to find themselves at a disadvantage during the crucial later stages of a game.
A high valuation in itself is not the risk. A higher valuation lowers dilution and can send positive signals to the market about the quality of the company, both favorable to founders. But too high a valuation can create unrealistic expectations, reduce flexibility, negatively affect a founder's relationship with investors, and create pressure if the company falls short of the plan.
Consider a fictional company with $20M ARR that is growing 100% annually that raises capital at $200M, or 10x ARR—a good multiple for companies with similar size and growth. The investors are likely both excited to invest and “win the deal” but also nervous and banking on the company achieving the projections on which the valuation was based. The investors have almost certainly had to justify the investment and valuation to an investment committee.
Fast forward a year from this investment decision. The company falls short of the conditions assumed at the time of investment and grows 50% instead of 100%. The investors now feel the price paid just one year earlier wasn't justified because a company that is doubling each year is more valuable than one growing at half that rate. Based on the actual growth rate, a “fair” entry value would arguably have been closer to ~5x ARR , or $100M, half the valuation at which the initial deal was done. Furthermore, while the company ended up growing to $30M in ARR, at the assumed 5x ARR multiple for companies growing 50%, the implied valuation for the company is now only $150M…25% lower than the investors initially paid, despite its larger size and being a year into their investment. This scenario is not uncommon; companies miss revenue targets all the time. But too big a miss in a year after a capital raise, especially when there was significant upward pressure around valuation, can cause broader issues.
While the founder feels performance is still strong, and the path forward as promising as ever, the investors may feel buyer’s remorse and face increased scrutiny from their investment committee and colleagues. Rather than celebrating good growth, the result may be to push for cost cutting or similar measures, just as the founder and leadership team are making plans to lean into and invest for growth. These two approaches are fundamentally at odds with each other, and over the years I have talked with a number of founders who find themselves very constrained by this negative loop.
As a founder, I know what it is like when an investor is getting too deep into the business or seems not to appreciate the progress that has been made. It often shows up in board meetings where questions begin to reflect emerging concerns or even skepticism instead of curiosity and support. This shift can be frustrating for a founder and can make it harder to motivate a large team of people.
John Doerr has said that investors and founders should want to serve with each other in a foxhole, a reflection that building an early-stage company is extraordinarily difficult and requires enduring adversity together over many years. Misalignment early can create tension, weaken trust, and complicate future negotiations, even if the company performs well and achieves meaningful success.
Now, consider the alternative. Suppose the company had taken a somewhat lower valuation, still a strong outcome but in a more reasonable range. Even if the company falls short of expectations, the potential for the founder and investors feeling they are “in this together” is much higher. And alignment around the future has a better chance to take hold. Put another way, resisting the urge to fight for every last dollar of valuation can create the conditions for a stronger long-term partnership through the good, the bad and the ugly. This is particularly true if a company expects to raise future rounds of capital and wants to maintain the option of investment from existing investors.
There are other potentially negative outcomes to raising money at too high a valuation.
Like Brunson, founders should look beyond maximizing the value of the deal in front of them. While valuation gets the headlines, it is often other terms like those determining economics and control that end up being more important to success, impact, and long-term wealth creation. Driving too hard a bargain on valuation today may increase the likelihood of having to concede on what matters most in future financing rounds.
Here are a few examples.
As a former founder, I want to make sure that other founders put themselves in the best possible position to raise the capital their companies need to thrive and win, perhaps a CEO’s most important responsibility. I write this even as I serve as an Executive-in-Residence with A-Street, an investor in education companies, because driving outcomes for students depends in part on founders having the runway to start and build companies over time. With the value of hindsight, I know that even the best financial projections, especially those presented during funding rounds, will often bump up against unforeseen circumstances, both positive and negative. Market conditions also matter. Raising money during a very good economic cycle may make it easier to maximize valuation but create risk during subsequent fundraising if conditions change.
A thoughtful approach to valuation during early rounds can preserve optionality, maintain greater alignment with investors and increase the possibility that such investors continue to invest. Founders should follow Brunson’s lead and focus not only on maximizing valuation today, but on putting themselves and their companies in the best position to win the 4th quarter.
