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Taking VC money is a lot like a record deal. You're giving up some amount of control in exchange for resources and validation now. Record deals and VC deals a

Taking VC money is a lot like a record deal. You're giving up some amount of control in exchange for resources and validation now. Record deals and VC deals are not for everyone. I think the way to determine that is to decide what your personal goals are and ask your teammates the same thing. I think you also need to be very realistic about your market and idea, if you have a multi-billion dollar idea you're going to need backers... if you are already paying the bills and can dominate a smaller market without more funding that might be ideal for you? This all comes back to what you want, once you know what you want all the other decisions get much easier. Good luck! :)

theturtletalks 8y ago
I think this is great advice, but many founders think that if they don't raise funding (or take the funding offered), a competitor who will, can come in and dominate the niche market. I also remember reading an article about SoftBank wanting to invest into Uber. If Uber turned them down, they would just give that money to Lyft or another competitor.
- alexpetralia 8y ago
  For non-Uber deal sizes, couldn't you always take that offer as substantial external validation and shop that around? For example, if Google says they'll acquire you or run you out of existence, couldn't you always go to VC (ie. any alternative of Google) and say: * Google wanted to acquire us because they like our team and/or the idea. You can either buy Google stock, or make an investment in us. This at least gives you some out between the "take our investment or die." But maybe this wouldn't work in practice for some reason? I'd be curious to hear. It just seems the market can't reasonably be in equilibrium when everyone is forced to take money _at the mere threat of_ producing (or investing in) a competing product. . [Edit] It's also important to keep in mind that often cash is much more fungible than the execution of an idea. I can put 1MM into your business, or a business that I think will put _you_ out of business, but if I don't trust that team or they can't execute, that 1MM may as well be toilet paper.
melonbar 8y ago
Perfect analogy! I will be sure to bring this up when me meet for our next sprint.
- djyaz1200 8y ago
  Good luck, FYI I think the other comments here are insightful. I believe a mistake we all want to avoid is assuming funding is fractal aka the same at every magnification. Smaller opportunities are handled much differently than bigger ones. The problem is sorting which is which, something everyone (including investors) have trouble determining. So I think it's on us (entrepreneurs) to decide whether we're aiming for the moon or more modest goals. ...and there is NO shame in building a company to millions instead of billions and keeping it all. Also no shame in aiming for the moon and missing (or better yet succeeding). The only thing I'd be ashamed of is letting someone else make or impose the decision on me.

theturtletalks 8y ago

I think this is great advice, but many founders think that if they don't raise funding (or take the funding offered), a competitor who will, can come in and dominate the niche market. I also remember reading an article about SoftBank wanting to invest into Uber. If Uber turned them down, they would just give that money to Lyft or another competitor.

alexpetralia 8y ago
For non-Uber deal sizes, couldn't you always take that offer as substantial external validation and shop that around? For example, if Google says they'll acquire you or run you out of existence, couldn't you always go to VC (ie. any alternative of Google) and say: * Google wanted to acquire us because they like our team and/or the idea. You can either buy Google stock, or make an investment in us. This at least gives you some out between the "take our investment or die." But maybe this wouldn't work in practice for some reason? I'd be curious to hear. It just seems the market can't reasonably be in equilibrium when everyone is forced to take money _at the mere threat of_ producing (or investing in) a competing product. . [Edit] It's also important to keep in mind that often cash is much more fungible than the execution of an idea. I can put 1MM into your business, or a business that I think will put _you_ out of business, but if I don't trust that team or they can't execute, that 1MM may as well be toilet paper.

melonbar 8y ago

Perfect analogy! I will be sure to bring this up when me meet for our next sprint.

djyaz1200 8y ago
Good luck, FYI I think the other comments here are insightful. I believe a mistake we all want to avoid is assuming funding is fractal aka the same at every magnification. Smaller opportunities are handled much differently than bigger ones. The problem is sorting which is which, something everyone (including investors) have trouble determining. So I think it's on us (entrepreneurs) to decide whether we're aiming for the moon or more modest goals. ...and there is NO shame in building a company to millions instead of billions and keeping it all. Also no shame in aiming for the moon and missing (or better yet succeeding). The only thing I'd be ashamed of is letting someone else make or impose the decision on me.