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Whats wrong with taking large outside investment if the terms are favorable? As an extreme example, if I thought my company was worth $40m and someone offered
by lojack 8y ago
Whats wrong with taking large outside investment if the terms are favorable?
As an extreme example, if I thought my company was worth $40m and someone offered $20m in exchange for 10% of my company I would absolutely take that deal whether or not I needed the money.
The problem might not be that the company is taking a deal when they shouldn't. It very well could be that the investors are overpaying. It's also totally possible that this is a good deal if it helps the company get a bigger slice of the market because they can grow quicker.
- albertgoeswoof 8y agoYou’d take that money, and now you have a 200m dollar company, so you need to hire, market and scale like a 200m dollar company. And btw you need to be worth a lot more than 200m next year otherwise your investors (who have significant influence) will be pissed off. So instead of continuing to deliver for your current customers and users you start chasing bigger things, and if you’re lucky it works, if not you fail and your company burns all the cash in a couple of years and files for bankruptcy.
- exolymph 8y agoYou're both right. Whether taking VC capital makes sense is context-dependent. What kind of business is it, and what are the market dynamics? What are your own goals for the business? Etc.
- deleted 8y ago[deleted]