Hell Yes, You Should Raise VC Funding

http://www.npost.com/2009/08/18/hell-yes-you-should-raise-vc-funding/

by ricaurte • 17 years ago

18 9 17 years ago

npost.com

icey• 17 years ago

You don't have to bowdlerize your headlines.

seldo• 17 years ago

True, you really fucking don't.

bdr• 17 years ago

"Bowdlerize" is more specific than "censor". I don't think it applies here.

zackattack2• 17 years ago

Bowdlerize means change out the swear words. i.e., expurgate them. [ex = out of , purg = cleanse, ate = verb]

Thomas Bowdler was a guy who published a women-and-children friendly translation of Shakespeare.

I regret posting this, because I strongly suspect the more time-consuming process of actually looking up a word would improve retention. This is because declarative memory is actually condensed episodic memory.

Even better, look it up yourself after reading this post! At a different time and a different location!

grellas• 17 years ago

The benefits of VC funding do you little good if you get clipped in the process, which is precisely what is likely to happen to you in today's lousy funding environment unless your company is truly exceptional - poor valuations, oppressive terms and conditions, lopsided liquidation preferences, etc. are unattractive by any measure.

The author pitches the VCs' expertise, and this is a valid point. If you are going to be potentially acquired, it helps immeasurably to have a talented team at your side (as well as sufficient financial backing) to enable you to negotiate for the best price.

But that doesn't mean you take your bootstrap startup and run to the VCs when you are at your earliest stages and hence at your weakest. They may fund you but that is when you get the worst terms.

The best path I have seen after many years of working with bootstrap startups is one where the startup defers VC funding until it builds sufficient value in the company to warrant a solid valuation. At that stage, the startup can approach the VCs from a position of strength, get a good valuation, and get good terms. That brings the needed VC expertise into the company but only when it most benefits the founders and other early-stage participants.

Some startups, of course, have capital-intensive needs right up front but these are not bootstrap startups and they will live or die by VC funding in the early stages.

For the bootstrap, bide your time, plan wisely, limit your expenses, stay lean, and build value. Then you will have the choice whether you do or don't want to bring in the VC cash and expertise, depending on how it fits into your strategic plans.

VCs can and do add tremendous value to the right situations but don't go chasing after an ill-timed funding just to get VCs into your company.

javery• 17 years ago

You can accomplish alot of these things by finding a good set of advisers and giving them a much smaller percentage of your company.

holaamigos• 17 years ago

The most important thing about taking VC funding is the money. Its real money that you can spend now. We raised $3MM and this allows us to iterate on the product and the pitch and to get it right. Without funding, there would be no way that I could have done this business, with a wife and two kids, ramen is not feasible for dinner (more than twice a week anyway).

rwebb• 17 years ago

author: randall lucas, senior associate, voyager capital

http://www.voyagercapital.com/team/index.php?category=Invest...

zackattack2• 17 years ago

My favorite quote from the article:

"instead, we have an institutionalized way to recycle capital from its gargantuan silos, a means for taking the risk that could be ruinous to an individual and divvying it up among the pools of concentrated capital. We call that institution VC"

This is great. It helps explain the equation I learned in econ class, savings = investment.

Hell Yes, You Should Raise VC Funding

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