How Not to Get Screwed by VCs

http://www.readwriteweb.com/readwritestart/2009/06/how-not-to-get-screwed-by-vcs.php

by sant0sk1 • 17 years ago

12 11 17 years ago

quellhorst• 17 years ago

Easiest way to avoid getting fucked by VCs, don't use them. Bootstrap and work your ass off.

Depends on the business. Most companies don't need or qualify for venture money and believe they need it because of what they read on teh blogz. Building a high growth 10x return potential 9 figure company doesn't come easy.

Pretty sure Loopt bootstrapped to start and worked their ass off. I'm also pretty sure, they couldn't do what they need to do without $13.3m or so in funding. Having sequoia and NEA also helps a lot beyond the dollars. The value add from those VCs is significant, not bullshit by any means.

menloparkbum• 17 years ago

Having sequoia and NEA also helps a lot beyond the dollars.

How do they help beyond the dollars? I did two startups backed by Sequoia and they didn't provide any help besides the money.

spitfire• 17 years ago

Don't use them.

wheels• 17 years ago

This isn't Reddit; please don't write comments like that. If you're going to write a one liner please try to at least find something cleverly amusing rather than obvious and tired.

Some ventures will do better with venture backing, in fact, that's covered in the article, and there are some reasonable gotchas in the article. Your comment, on the other hand, adds nothing.

known• 17 years ago

aka be diplomatic

quizbiz• 17 years ago

Hold on to as much equity as you possibly can.

marcus• 17 years ago

First time entrepreneurs usually confuse equity with control, there can be dozens of mechanisms, by which VC's can gain control of a company they invested in.

A few examples:

* Controlling all C-level positions, firing you at will (which will affect your vesting schedule) * Controlling spending which will force you to raise further rounds, further dilluting you * Board seats * Veto power for exits

Get a lawyer and read everything a dozen times...

How Not to Get Screwed by VCs

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