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

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

#291

Post by berniedurfee »

sfink wrote: post #268
DeathArrow wrote: post #208

Looking at the author's bussineses website, here's a sales pitch for potential new employee: >OpenRegulatory is different. It's 100% boostrapped. Ironically, having no investors (and less money) opens up interesting opportunities: We can serve customers who don't have a lot of money, like, Healthcare startups. And we can build software which only solves a tiny problem, and solves it well. While eating your own dog fo…

> future employees most likely won't be pure idealists who will take a lower pay out of the satisfaction that their work helped others If you rewrite that to "a much smaller percentage of prospective future employees won't be pure idealists..." then I would agree. But it's about the pool being smaller, and in fact small enough that you risk not being able to find anybody, but the fact that 95% of people are not going…

I was going to say exactly this. There are many talented engineers for whom compensation is not their primary motivation.

Working on interesting problems, working in specific domains or working for a mission-based company trying to make the world a little better are all strong motivators.

I suppose the overall pool of available candidates is smaller, but I don’t think the pool of candidates with strong skills is necessarily smaller.

Once you find purpose in your work life, that becomes a compensation all on its own.

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

#292

Post by epolanski »

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!!!!!

You're still unprofitable after 13 years though, aren't you? Growth is prompted by skyrocketing sales costs.

Does any VC funded company ever ends up not losing money?

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

#293

Post by jwr »

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…

Customers of VC-funded companies take note: none of these outcomes are good for you.

When you have a choice between being a long-term customer of a VC-funded company vs a self-funded business, think about long-term incentives and don't follow the rich and shiny.

Disclaimer: I run a self-funded SaaS business and sometimes explain why I never wanted VC funding and why a LARGE BUSINESS is not necessarily better for customers.

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

#294

Post by dzikimarian »

anonzzzies wrote: post #44
raesene9 wrote: post #32

The article has a lot of interesting points, but seems to miss out on one of the main reasons (IMO) that startups take funding, which is to grow faster than (or as fast as) their competition. Unless you're lucky enough to be in a market segment without competition, you need to keep an eye on what your competitors are up to. If they can expand faster, add features faster and get more customers than you, it damages you…

OR (as you say, but many miss) you do not care about being the market leader. I just want to have a nice company with nice people, no stress and making millions for all to live. I don’t need vc money, stress, be the market leader or ‘be faster than the competition’. A LOT of services or products you can make a long term (decades) money with like this. I don’t need more than 10m euros in my life, nor do my colleagues…

Then you slowly bleed nice people as they switch to company that went for money and now is able to pay better.

If you expect company to reject money in order to stay nice, you should be ready to do the same personally. Otherwise it will not work.

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

#296

Post by eikenberry »

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…

I think it is mostly based on one's POV. From the founders perspective starting a company, raising capitol and eventually taking it public might be taken as a wildly successful path. To an employee all it means it more and more dehumanization, destroying the company as a work place.

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

#297

Post by jwr »

anonzzzies wrote: post #181
yowlingcat wrote: post #119

Earlier quoted context omitted.

> No idea why I want all this misery of competing, stress, exposure, running all the time etc etc. 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, hav…

> Have you ever run a business before? Only 30 years. You? Not mean to be as snarky, but this US all or nothing stuff is getting on my nerves just a bit. I came from a simple background, but in a country with free education, so I got a degree in uni, opened a company in high school, all without too much risk. Didn’t need to work myself to death, didn’t have much stress, didn’t need VCs and make more than most here wh…

Very similar experience here. Anonzzzies is not a unicorn outlier :-)

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

#298

Post by no_time »

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…

With all due respect, your company is probably one of the biggest and most successful mass surveillance operations on earth. I wouldnt lose sleep over these things too if I knew my company would be scooped up by a 3 letter agency if anything were to happen that threatens this flow of data.

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

#300

Post by DeathArrow »

jacquesm wrote: post #198
Alex3917 wrote: post #167

Earlier quoted context omitted.

> But no less unusual than building a successful company to begin with. Statistically, companies that raise venture capital are vastly less likely to succeed than those that are bootstrapped. Think about it this way: from the perspective of VCs, the most successful apps of the iOS era were Uber and AirBnB. But from the perspective of entrepreneurs, the most successful app of the iOS era was the Flashlight app. Which…

You're right that in numbers of survivors there bootstrapped ones are going to outnumber the VC ones. But in terms of total # of employees, total $ of turnover and profits I would expect it to be the reverse. But for any individual founder, if you want to aim for 'successful enough to be relatively wealthy and worry free' then 'bootstrapped' is the way to go. If you aim for an outsize success, wealth for the next N g…

Seeing that you wrote the article 12 years ago, I am curious how did it work for you. Did you make it to the top of the mountain?
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