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

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 those end states and what it realistically will take to get to them, don’t raise money from VCs.

But, having done so and been successful and taken a company public, I can say: it’s pretty great and I have zero regrets about anyone we raised money from. And I’m proud that everyone who invested in us prior to going public made at least a 10x return.

While there are plenty of VC horror stories, there are fairytales as well.

What does SSBC mean in this context?

The writer is not an entrepreneur (according to his bio), and didn't back his "analysis" with any form of data (beyond some anecdotal telltales) — yet his conclusion is stated without any sliver of doubt: "it *will* destroy your company"!

>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 wondered how Google and Facebook will going to be profitable with billions of users and gaining no money from those users. There's always going to be a way to convert users into money.

Many companies are trying to grow at first and then find a way to monetize the user base.

Having co-founded multiple companies and been an early or the first employee at several more, several of which have taken VC funding, this feel unnuanced. Of the VC funded companies I've been involved with I think only one would've happened at all without VC funding because they'd have been too capital intensive. For the one that we could've done without a VC, I do somewhat regret taking VC money, as we ended up pushed by investors into selling off a part of the business that could've been a nice lifestyle business, but it's not at all a given it'd have grown enough without taking investment to be worth it.

I've bootstrapped businesses too, and it's an arduous process and often far slower. If you're successful you're then lucky enough to be fully in the drivers seat, and that's great. If you're not, chances are you've wasted far more time.

Overall it boils down to what do you want? VC accelerates the the whole process, and multiplies outcomes - both risks and rewards. If you feel comfortable with taking a higher risk for a chance at either making it big fast or failing fast, then VC investment can be great. If your idea is your baby or your life's mission and it's what you want to keep doing whether or not it's a runaway success, VC might be a poor fit for you unless you happen to strike it lucky very quickly and can dictate terms - control can slip away very fast if things go in the wrong direction or too slow.

I'm far less likely to take VC money if I were to start something today largely because I've got enough money that it'd take far better terms to make it feel worth it, but I don't regret taking investment in the past other than maybe that single one I mentioned.