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Don't Take VC Funding – It Will Destroy Your Company

eidel.io

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Re: Don't Take VC Funding – It Will Destroy Your Company

#61

Post by caned »

DeathArrow wrote: post #9

>So, what about those 10 million Euros? If MagicalUnicorn were your company, would you as a founder personally receive that sweet cash when your company gets VC funding? Nope. If the company receives 10 millions for 50% of the shares and it becomes valued at 100 millions, you can sell the other 50 % of the shares for 50 millions and let the venture capitalists deal with the business while you enjoy cocktails at the b…

There's a question of values here. VC may be the path for maximum monetary gain and maximum growth, but maybe it's not if you want to _make_ something that represents your values. Once your 50% slips to 49% and below, it's game over.

Re: Don't Take VC Funding – It Will Destroy Your Company

#62

Post by DeathArrow »

>You’re no longer building your company the way you like it. You’re building your and the VCs company so that they can sell it, for a price higher than the one they paid. There are no alternatives. The course is set. You’re building to sell.

What's wrong in building to sell?

Re: Don't Take VC Funding – It Will Destroy Your Company

#63

Post by nvrgngvup »

DeathArrow wrote: post #28

>Maybe it’s the amount of customers a company has, or the speed at which that customer base is growing. Business dudes like to call it traction, but I’m not sure whether they know what they’re really talking about. I’m not even sure if they know what they’re talking about. Regardless, whatever traction may be, the minor problem is that, well, having traction doesn’t magically make your company profitable. People wond…

[dead]

Re: Don't Take VC Funding – It Will Destroy Your Company

#64

Post by anonzzzies »

sf4lifer wrote: post #23

Only take rocket fuel (VC funding) if you've got a rocket (PMF in a massive TAM with net revenue retention) If you don't have a rocket, the rocket fuel will be wasted and disappointing in any other vehicle. Ideally you bootstrap until it's clear. But if you start the company with VC funding, you should know the expectation. If you truly have a rocket the economics of VC funding is favorable for everyone.

How do you know if you have a Rocket? Many (most?) VC funded companies are just appearance, no substance and it’s all very apparent. All the new AI ‘products’ for instance. So those are clearly not rockets, just blah and hype. Maybe we had rockets before, but I don’t want to lie and cheat like some of our vc invested companies did (most are gone). Never were rockets, just hype, Twitter presence and faking all around.

Re: Don't Take VC Funding – It Will Destroy Your Company

#65

Post by Kye »

blibble wrote: post #52
eastdakota wrote: post #22

You’re so right! It was an absolute disaster for us. Never do it!!!!! Kidding aside, it is true that raising money from VCs puts you on a very defined path with really only three potential outcomes: 1) failure, 2) sell to acquirer, or 3) go public. There are a small handful of exceptions, mostly for companies that throw off massive amounts of cash, but, realistically, those are the outcomes. If you don’t like any of…

> You’re so right! It was an absolute disaster for us. Never do it!!!!! has cloudflare ever had a profitable quarter? I could give away my investor's $10 bills all day too

On a skim, they seem to be losing money the same way Amazon did. It's marginal, with a purpose, and could be turned around by trying to.

Re: Don't Take VC Funding – It Will Destroy Your Company

#66

Post by rattray »

dabeeeenster wrote: post #35
eastdakota wrote: post #22

You’re so right! It was an absolute disaster for us. Never do it!!!!! Kidding aside, it is true that raising money from VCs puts you on a very defined path with really only three potential outcomes: 1) failure, 2) sell to acquirer, or 3) go public. There are a small handful of exceptions, mostly for companies that throw off massive amounts of cash, but, realistically, those are the outcomes. If you don’t like any of…

> While there are plenty of VC horror stories, there are fairytales as well. What's the ratio, though??? 10/1? 20/1? 50/1?

Probably closer to 100/1, or worse - that's the gamble you (should) know you're taking if you accept venture capital.

It's not for everyone, but eastdakota is right that it's not for nobody.

Re: Don't Take VC Funding – It Will Destroy Your Company

#68

Post by onion2k »

eastdakota wrote: post #22

You’re so right! It was an absolute disaster for us. Never do it!!!!! Kidding aside, it is true that raising money from VCs puts you on a very defined path with really only three potential outcomes: 1) failure, 2) sell to acquirer, or 3) go public. There are a small handful of exceptions, mostly for companies that throw off massive amounts of cash, but, realistically, those are the outcomes. If you don’t like any of…

According to Statista there were 16,464 VC deals signed in 2022. There were 181 IPOs in that year. The most IPOs in a year ever is 1,035. Obviously the two aren't directly comparable, but the point I'm getting at is that an IPO exit for any company is really unusual. If you found a company and take on VC funding your exit event is much more likely to be getting acquired if you don't fail. It does happen, and deservedly so, but if you're at a point prior to raising 'what if we IPO?' probably isn't a very useful question.

Re: Don't Take VC Funding – It Will Destroy Your Company

#69

Post by DeathArrow »

>If you had any romanticized notion of building the company of your dreams with your employees becoming your best friends or family, well, now’s the time to let go of those ideas

I think most people start a business to make money, not to gain friends or enlarge their families. If your objective is to gaing friends or enlarge your family, there might be better means to accomplish that than starting a business.

Re: Don't Take VC Funding – It Will Destroy Your Company

#70

Post by littlestymaar »

uLogMicheal wrote: post #48
jorvi wrote: post #31

Earlier quoted context omitted.

> central banks I think you mean big banks. Aside from maybe a line of communication due to their financial size, VCs have very little to do with the Fed or ECB.

You missed a step, it goes from the central banks to the LPs to the VCs. The big hedge funds that get all of that low/zero interest money are certainly active in private equity AND forcing their behaviors/policies on companies far and wide.

Except you absolutely don't need any connection to the central bank to benefit from their monetary policy.
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