

Should you let a VC invest in your seed round? - eladgil
http://blog.eladgil.com/2010/07/should-you-let-vc-invest-in-your-seed.html

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tptacek
I'd like to hear stories about companies that had a VC in an early round that
_didn't_ have that VC in a successful follow-on round and that _weren't_
clearly, obviously, notably "killing it" in the market already.

You can say there are ways to navigate this problem, but it seems to me that
negotiation timing and valuation are core skills VC's have that you don't
have, and a VC that gets in on your seed round probably knows they have you
over a barrel and can effortlessly make things hard for you. It's not just
signalling; it's that it concedes a huge negotiation advantage to the
participating VC, right?

(NB: I'm interested in this story not because I'm likely to go out for VC ever
[again], but because it adds to the annals of "taking VC is hazardous to your
company health").

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eladgil
I know of one company in particular that raised $1 million for their entire
seed from a VC. 1 year in the VC partnership decided things weren't going well
enough to invest more, and they shut down when they couldn't raise money. I
can't name specific names publicly here, but it was a clear situation where
the VC was not acting maliciously - he literally told me friend (the
entrepreneur) that the partnership decided the company was no longer worth
partner time.

