

Hell Yes, You Should Raise VC Funding - ricaurte
http://www.npost.com/2009/08/18/hell-yes-you-should-raise-vc-funding/

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grellas
The benefits of VC funding do you little good if you get clipped in the
process, which is precisely what is likely to happen to you in today's lousy
funding environment unless your company is truly exceptional - poor
valuations, oppressive terms and conditions, lopsided liquidation preferences,
etc. are unattractive by any measure.

The author pitches the VCs' expertise, and this is a valid point. If you are
going to be potentially acquired, it helps immeasurably to have a talented
team at your side (as well as sufficient financial backing) to enable you to
negotiate for the best price.

But that doesn't mean you take your bootstrap startup and run to the VCs when
you are at your earliest stages and hence at your weakest. They may fund you
but that is when you get the worst terms.

The best path I have seen after many years of working with bootstrap startups
is one where the startup _defers_ VC funding until it builds sufficient value
in the company to warrant a solid valuation. At that stage, the startup can
approach the VCs from a position of strength, get a good valuation, and get
good terms. That brings the needed VC expertise into the company but only when
it most benefits the founders and other early-stage participants.

Some startups, of course, have capital-intensive needs right up front but
these are not bootstrap startups and they will live or die by VC funding in
the early stages.

For the bootstrap, bide your time, plan wisely, limit your expenses, stay
lean, and build value. Then _you_ will have the choice whether you do or don't
want to bring in the VC cash and expertise, depending on how it fits into your
strategic plans.

VCs can and do add tremendous value to the right situations but don't go
chasing after an ill-timed funding just to get VCs into your company.

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icey
You don't have to bowdlerize your headlines.

~~~
bdr
"Bowdlerize" is more specific than "censor". I don't think it applies here.

~~~
zackattack
Bowdlerize means change out the swear words. i.e., expurgate them. [ex = out
of , purg = cleanse, ate = verb]

Thomas Bowdler was a guy who published a women-and-children friendly
translation of Shakespeare.

I regret posting this, because I strongly suspect the more time-consuming
process of actually looking up a word would improve retention. This is because
declarative memory is actually condensed episodic memory.

Even better, look it up yourself after reading this post! At a different time
and a different location!

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holaamigos
The most important thing about taking VC funding is the money. Its real money
that you can spend now. We raised $3MM and this allows us to iterate on the
product and the pitch and to get it right. Without funding, there would be no
way that I could have done this business, with a wife and two kids, ramen is
not feasible for dinner (more than twice a week anyway).

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javery
You can accomplish alot of these things by finding a good set of advisers and
giving them a much smaller percentage of your company.

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rwebb
author: randall lucas, senior associate, voyager capital

[http://www.voyagercapital.com/team/index.php?category=Invest...](http://www.voyagercapital.com/team/index.php?category=Investment+Team&team-
member=Randall+Lucas)

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zackattack
My favorite quote from the article:

"instead, we have an institutionalized way to recycle capital from its
gargantuan silos, a means for taking the risk that could be ruinous to an
individual and divvying it up among the pools of concentrated capital. We call
that institution VC"

This is great. It helps explain the equation I learned in econ class, savings
= investment.

