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Except that, taking VC money at high valuations is a huge factor in options open to the CEO and/or founders. All that money comes with a lot of obligations, hyp
by chetanahuja 11y ago
Except that, taking VC money at high valuations is a huge factor in options open to the CEO and/or founders. All that money comes with a lot of obligations, hyper-growth being the biggest one of them. VC money and valuations are absolutely part of this equation.
- GCA10 11y agoYou're totally right about VC obligations ... but that burden exists with any kind of financing. Let's suppose my grocery store guy has a $300,000 loan from Bank of America, with interest due every month. He needs to meet payroll, buy his supplies and service his debt. He's getting sweated by his financial backers just as much. Maybe more so.
- chetanahuja 11y agoA bank loan doesn't come with board seats a large equity stake in your company and is not premised on fast growth of the existing business. If the business owner decides that the current size of the business is just right to keep everyone in the company employed and make the loan payments, they're good. A VC backed company doesn't have that option. TL;DR VC capital is very very different from a bank loan.