SEO | How One Startup Completely Blew A $24 Million Deal

Rand Fishkin is the CEO of SEOmoz, an SEO software company. He has tried, and failed, to raise venture capital twice.

His latest attempt was a $24 million failure.

Here's what happened:

Initially, Fishkin didn't want to raise money. SEOmox is profitable, and it's projecting $11.5 million in revenue this year.

But a number of VCs began inquiring about a Series B round, including GRP Partners , Bessemer Venture Partners , Accel Partners , and General Catalyst.

Before long, Fishkin warmed to the idea of outside funding. He decided it'd help him grow his engineering team, scale data, expand facilities, release new products, spend more on marketing, and give founders liquidity.

Fishkin zeroed in on one investor, and the two began talking terms. He also talked seriously with three other investors.

The first investors offered a $25 million investment at a $50 million pre-money valuation. Fishkin thought the valuation was too low; he negotiated it up to $65 million.

When he pushed for a $100 million valuation, he began to lose investors. One of the four dropped out. Fishkin moved forward with the first investor who offered him $25 million.

The agreed upon terms were a $24 million investment, $19 million from the investor and $5 million from another, at an $89 million post-money valuation.

The deal was nearly done when things took a turn for the worst. Fishkin sent the lead investor his July numbers, and they were $70,000 off the mark.

"We didn’t worry much about these numbers - for the past 4 years running SEOmoz, we’ve often see months that beat our targets and some that don’t," he writes. "Unfortunately, our new would-be-investors didn’t see things that way."

After weeks of back and forth and a slew of meetings, the investor called Fishkin to tell him no deal would be happening.

Fishkin blames four things for the deal falling apart:

Fishkin wrote about the let down on his blog. Head over there for more details on his $24 million mishap >>

Please follow Business Insider on Twitter and Facebook .

Join the conversation about this story »

See Also:

IRENE KNOCKS OUT POWER FOR MILLIONS, NYC SUBWAY TO REOPEN

Historic Covered Bridge In Bartonsville Vermont Swept Away In Irene Flood [VIDEO]

Vermont And Upstate New York Are Getting Absolutely Hammered By Irene Floods...