http://blog.meebo.com/?p=374
The post is an interesting take on the whether or not to get help from Venture Capitalists when starting a new company. I'm sure there is definitely one hydran that can relate to this:
The idea of starting a company’s pretty exciting. You have a vision, you begin to talk to people about it and form a solid team of folks to execute on the idea, and you begin work on the actual product. Of course, without money in the bank funding people’s salaries, an office, a copier and fax machine, etc, it seems pretty tough to actually get going. The result’s that more often than not, people wonder how to attract the attention of VCs when they’re just starting to build their product. My simple answer:
Don’t.
I would definitely agree in trying to avoid getting the help of VCs if at all possible. Not that I've ever started a company, but after speaking with numerous people and seeing what happens places it might best to pursue other means if possible.
3 comments:
I agree that it's best to avoid VC money as much as possible.
After reading the full post on the Meebo blog, I saw that Seth's argument was basically "get VC funding, but wait until you have a popular product first", which is better than the alternative of getting it too early, for sure.
Some people like Paul Graham and Joel Spolsky have written about why they were successful at the other alternative of skipping the VC step entirely.
Marc Andreesen doesn't necessarily advise people to go that route, but he has some useful insight, from his own experience, in the "truth about venture capitalists" and "guide to start-ups" series on his blog.
I think it all depends on what kind of business you're trying to build. If your goal is to become the next Microsoft, Google, or Amazon, it's hard to avoid the funding rounds. Sidestepping the question of whether that size is good or not, how big do you think a company can grow (in the tech industry) while staying fully bootstrapped? (Examples welcome.)
If at all possible DO NOT go to VCs. This pretty much leaves: your own money, borrow money from "banks" which is probably just as bad or maybe worse than VCs, get private placement money, boot strap up. The ideal would be to boot strap up where you start with very small cash flow requirements and have some income coming in and grow both.
VCs can end up "taking the whole company". Banks can end up "killing the whole company".
My previous comment would have been just my $0.02 worth but I don't have it since the VCs took it.
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