The VC model requires spending a lot of time on building models, creating phantom variables to adjust your assumptions, and managing finance people when you could stay lean, and run hard at revenue so you can adjust when you KNOW what business model works! [...]
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It’s possible for everything to be buttoned up and look like you can’t fail — strong intellectual property, great ideas marketing ideas and an amazing team — and the idea is truly “too big to NOT fail.” But if it’s really a good long range vision, then there’s probably a way to engage the ideal corporate buyer to assure you hit your exit. [...] If you take your business to a VC you have a 75% chance of handing over majority ownership to someone who will unload it. [...] Capital can always wait for you. A key measure for building up value is whether can you can actually build excitement. Most VC deals go down, in a well orchestrated feeding frenzy with a bunch of VCs all validating each other and trying to pile on their money at once. [...] VC’s stick to investments limited to the markets they understand. At the same time, they exist to venture the risk of new markets. They will do their homework, so you better do yours and present them with a real opportunity. [...] A venture capitalist’s main problem is that they have few methods to understand the future performance of an investment. Therefore they rely exclusively on the resumes of the management. It’s not realistic think you can join this same club; and more important to understand you won’t get a good deal as an outsider — so go find an insider [...] Not only is VC not for everyone, the odds are there are much better ways to get your business funded and profitable. [...] If you are serious about your business, you should be ready willing and able to step up to taking on debt. Credit is an important thing to build and managing your debt is important [...] |
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Copyright © 2012 Matt Merriam - All Rights Reserved |
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