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Dumb question incoming. If your company is marginally profitable and stable, and you choose to ignore demands from an early minority stakeholder investor to sp
by ilikehurdles 7y ago
Dumb question incoming.
If your company is marginally profitable and stable, and you choose to ignore demands from an early minority stakeholder investor to spend more, what are the consequences? I get that they might stand in the way of future funding rounds, but what if you simply don't need future funding rounds? The VC likely has eight times as many bleeding startups as it has profitable, let alone growing startups. Would they ditch a profitable slow one?
- shartshooter 7y agoYour reputation can be significantly tarnished in the eyes of vc’s if you go that route. There’s nothing stopping you from ignoring investors(assuming you’ve got the board seats to retain control) but the expectation, generally, when taking vc I that 1) you’ll do whatever it takes to keep scaling 2) the market you’re going after is significant and 3) if either of those two things change then you’ll pivot/shutdown/etc. This isn’t gospel but I have a friend at a tier 1 vc who told me something to the effect of: we’ve got $X00MM in this fund. We’ve got four years to invest the money and will choose something like 40 companies over that time. Two need to become unicorns to make their nut. If you don’t have the intent to be that, then they don’t want to invest. Of course there are vc’s And angels who don’t follow that methodology but for the most part they want to invest in _growth_ startups rather than lifestyle businesses.