

Why you don’t need a Venture Capitalist - idigit
http://indiestartups.com/startup-information/why-you-don%E2%80%99t-need-a-venture-capitalist

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aneesh
For every entrepreneur who says you don't need VC money, I can find you one
who is equally convinced of the opposite. The biggest successes in technology
have been venture-backed. That's the point of VC - to allow successful
companies to scale up and have a shot at being super-successful.

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dennykmiu
I agree and I believe I am one of those who thinks one thing and do another. I
have had my own share of bad experience with VC's but I tried very hard not to
demonize and tried to learn from my past. Perhaps using an analogy that I have
seen in one of the YC posts, thinking that I could an astronaut one day
doesn't mean that I actually want to go to the moon, but it gives me the
motivation and the endurance to just get across town.

<http://www.lovemytool.com/blog/2007/10/vc-worst-enemy.html>

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jyu
There are a lot of problems in this article.

A lot of entrepreneurs can become disenchanted and unrealistic in
expectations. I have seen quite a few presentations from entrepreneurs, and
they are typically all over the place. Many lose focus, and do a bunch of
things that essentially don't matter. Having an experienced set of eyes with a
vested interest in the success of your start-up makes for an honest reality
check. Also, it helps you get through the rough patches.
[http://johnndege.com/2008/03/31/startup-advice-from-
someone-...](http://johnndege.com/2008/03/31/startup-advice-from-someone-who-
lost-a-company/)

The amount of funding VC's provide depends on where your startup is, what you
need, what you want to do with it. Series A financing is meant to prove your
concept, maybe test out a business model, maybe get some users. With internet
and software, a couple hundred thousand should get you to that point. Other
types of startups (medical devices, hardware, biotech) are more capital
intensive, and need more money to build a prototype and prove out the concept.
VCs are evolving and some are funding at similar levels to angels. Look at
Founders Fund and Charles River Ventures as examples.

No one is going to just hand you money and hope you do the right thing. VC's
are in business to make money and fantastic returns. There are startups that
work really well with VC funding, and startups that are better off staying
bootstrapped. I could get into more detail, but the basic idea is that if
you're not ready to grow at a hair losing pace over the next 3-5 years, don't
take VC money.

The alternatives do not seem well thought out in this article. Friend and
family money and mortgaging your house are not really direct substitutes for
VC's. Friends, family, fools are sources of initial funding, before you have
anything tangible. Mortgaging your house gives you cash in exchange for
additional personal debt, which is typically not the right type of financing
for startups. VC's and angels use equity investments, which means that if your
business fails, you're basically off the hook. Taking on debt means that you
owe that money whether your startup succeeds or fails. Not using expensive
software, outsourcing design work, using your house as an office, bringing
other developers are ways of cutting initial costs, but there are still
unavoidable costs to growing businesses. There is a cost to getting talented
employees, support equipment, and sales people. Not every startup can rely on
viral growth and word of mouth to get new customers.

I have seen too many entrepreneurs that blow $100k - $400k building and doing
"cool, shiny" things that don't matter, and start running out of money,
without showing any real traction or evidence that it can become a viable
business. Involving an experienced outsider to identify essential features,
actions, partnerships could easily mean the difference between success and
failure.

