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Specialist investors (e.g. technology angels or firms such as Sequoia Capital et al) usually have a very good appreciation of what will or will not work. They p
by babul 18y ago
Specialist investors (e.g. technology angels or firms such as Sequoia Capital et al) usually have a very good appreciation of what will or will not work. They possess sophisticated, and often surprisingly accurate, tools/models/instruments/processes to aid decision making. Hence, they are able to evaluate your business and model in ways you often will not, and provide a more rounded view even at the extremes of optimism or caution. Even for more general investors, if you make a lot of investments, you get a feel for things and eye for talent/business, and develop a good understanding of the markets you play in.
Whether it is worth a (big) chunk of your company really depends on the value investors provide. If they are able to give practical help (e.g. business advice, access to markets, distribution) and/or leverage important and influential networks/connections to aid you, and basically increase the bottom line while leaving you largely in control, then the answer should be yes (the early days of YouTube is an example that comes to mind, where they saw little growth until the investors came on board(?)).
I would rather have 70% of $10M in 2 years than (possibly) 100% of $1M in 5 years.
- fallentimes 18y agoI agree with the vast majority of your statement, but it could just as easily be 5% of $100M vs. 47% of 50M. The amount of dilution that occurs with these startups who receive multiple rounds of funding is borderline unbelievable.
- richcollins 18y agoVC investment should be a strategic decision, not a confidence booster. If VCs give you access to resources that you need to have a successful exit, then go for it. However, if you are willing to give up control of your company for outside validation, you have big problems.