Skip The VC

Have you thought about bootstrapping your company and "skipping the VC?" Taking VC money can be problematic. You can easily lose control of your future, even if you have majority control over your company. Let's talk about it.

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If you're here reading this, it's probably because you already know the dangers of taking VC money and the value in seeing if you can bootstrap your company from the ground up.

Personally, I'm not against VC money, but I know people who think "put together a pitch deck and go raise money" is the way to start a business.

I think if you need to raise VC, it will happen much further down the road in business development. Preferably when (a) you've achieved PMF, (b) you need to go after your market fast before you'd lose it to competition, and (c) you can't financially do it without additional funds.

Maybe I should have named this "Delay The VC," but it doesn't have that je ne sais quoi...

If you'd like to talk about how you can "Skip The VC" - drop me a line, let's chat!

If you think you're still all-in on VC but would consider a couple quick bullet points on the topic, here you go:

Loss of Control

You can lose decision-making power and control over your business. Venture capitalists often require a say in business decisions, which can lead to conflicts with your vision.

Dilution of Ownership

Accepting venture capital typically means giving up a portion of equity. Raising too much capital can significantly dilute your ownership stake in the company.

Pressure to Scale Quickly

Venture capitalists seek a high return on investment, which can pressure you to scale rapidly, sometimes at the expense of sustainable, long-term growth.

Misalignment of Goals

Entrepreneurs may worry that the goals of venture capitalists (often short-term financial gain) might not align with your objectives (like long-term growth, product development, or maintaining company culture).

Increased Scrutiny and Reporting Requirements

Venture capital funding often comes with the need for detailed reporting and performance metrics, which can be burdensome and time-consuming.

Risk of Losing the Business

If a company fails to meet certain milestones or runs into financial trouble, venture capitalists might take more control, potentially leading to you being ousted from your own company.

Compromising the Business Model or Culture

To appease investors, you might have to alter your business model or company culture, which can be against your original vision or values.

Rigidity Due to Formal Agreements

Venture capital involves formal, legal agreements which can be rigid. You might get locked into terms that are unfavorable in the long run.

Pressure for Exit Strategy

Venture capitalists typically look for an exit strategy, like an acquisition or IPO, to cash out on their investment. This can pressure you to focus on short-term exit strategies over long-term business health.

Pressure to Stay

Venture capitalists typically hold out for big exits. They want each company in their portfolio to pay back their entire portfolio, since they know many will fail. You may want to cash out and exit early, but be forced to stay on until the company blows up (in a good or bad way).

Dependency on External Funding

Relying on venture capital can create a dependency on external funding, and entrepreneurs may fear that their business won't be sustainable without continual investment injections.