Tuesday, June 14, 2011

VCs go away

Why I don't believe in Venture Capital Funding

Conventional wisdom for a startup is to generate enough dough to get a VC interested, and then it is his headache to put money to keep it going. I hate this thought and this mode..because

a. It takes away focus from what to build, to what would impress a VC
b. Instead of pleasing your customers, you are chained to please your investor
c. Easy money on the table cut short circuits cost control. You end up spending on elusive ideas where even a penny should not have been spent
d. A lot of startups can be initialled with one person-one room mode, and over time they can build going profitabilities eliminating the need of external investors. Entrepreneurs without VCs support don't even get that kind of start.
e. Equity is very costly..Giving it early would mean underselling yourself.
f. When business models are unsettled, they need fast changes and tweaks..More heads would mean this process would slow down.

In short, VCs go away

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