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

To be honest, startups play on another level than most SMBs. With a SMB, you can double your growth every year for 5-10 years straight, and do very well, but not be interesting for VCs. To be interesting and relevant for VC money, you need a business that can scale to millions of users.

If you can show that you're able to double growth every month (or similar short-window metrics) with an idea that could scale to a billion dollar company, you'll get the interviews all right. Hype is a big part of growth.

The problem, so to speak, is that you'll be competing against other startups - and if you they have the VC money, but you don't, there's a good chance they'll outpace/outgrow you.

I think it's very noble to grow as much as you can organically - but realistically speaking, it's difficult to compete against those that are funded.

And you don't really need to use the money you get - being funded also comes with a signaling effect. You get lots of publicity, and get to signal that serious investors are willing to back you.

> Remember when I wrote earlier that the VC dudes definition of “making everyone happy” after investing in your company doesn’t mean making it profitable? So now you might ask: Okay, so what do my VC investors want? ... They want to make a lot more money.

> ...

> Now, all of this might be none of your business, you might think. But it is! Because now the inevitable consequence, once you’ve taken VC funding, is that the objective of your company has changed: 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.

Why? Why do you have to respect the VCs' desires? Why can't you take VC funding, then use it to build a company that yields modest returns and live a comfortable life running it (and paying modest dividends to the VCs that over a few years return their investment)? Doing so would (I presume) not constitute any kind of breach of fiduciary duty, so what right can the VCs possibly have to enforce their preference for a more aggressive strategy?

People commenting on startups often imply - like in the quote above - that VC investors ultimately control any business they invest in, and not the founding CEO, even when that founding CEO holds the majority of the voting stock. This strikes me as bullshit. At least, nobody ever spells out the mechanism of control, and their inability to do so makes me think they don't know what they're talking about.

If I'm right that the narrative of VC control is bullshit, then what's the alternative explanation for why CEOs so often choose to pursue aggressive growth and sell their "babies"? Simple: the CEOs themselves want big money. It's not that the evil VCs are forcing the CEOs to do something they'd rather not do. It's that the VCs and CEOs are aligned in their objectives in the first place.

This is patently untrue and deceiving by the author, doubtlessly set to tell a narrative. Sure, some companies that receive VC funding are not profitable, maybe even most, but a sizable portion of the companies that receive VC funding ARE profitable. Denying this is deceiving the readers. In fact, the easiest way to receive VC funding is being profitable!

Nothing beats the feedback loop of profitability.

Have you ever run a business before? The belief that you can build a business without dealing with competition is a myth. Having a successful company requires picking your poison.

Non-VC is a different poison than VC, and I do agree that it is a much better approach for far more many businesses. But make no mistake, having a company with "no stress and making millions for all to live" is not a realistic goal. There is no free lunch in the world of business. Competition is everywhere. You can either ignore it or embrace it.