Many Venture Capitalists have horns
Why is it that when a company is just starting off, no one calls.. they don’t even care about what closet you started in. Your firm starts to grow, and then the phone starts ringing off the hook, VC firms calling right and left asking if they could ‘give you money’.
When our firm was started we had a whopping $1,500 and had to spend about $800 of it on hardware (IE: Computers).
We never tried getting VC mostly because we never thought we would need it. Within a few days of opening shop we had an actual client, then another.. then another… just about 300 days later we are at nearly a dozen employees, our client list is littered with fortune 1000 firms, we are showing a profit month over month and at this exact moment is when we are seeing the VC guys showing up out of the woodwork.
They offer a few million in VC, and all the inital founders of the company now would have to live like Peter from Office Space “I have 8 bosses” I am sure our reduction in ownership of the firm would dwindle our share to 3% of the company, if we are lucky, and we would have to report to one of their suits to order a paperclip.
What would we do with a few million? Honestly we don’t know, see this is the problem… we don’t like wasting money. If someone handed us a huge income level like that the temptation to start hiring like mad and next thing you know you are sitting there with this huge overhead… the VC dries up and you have to start a massive layoff.
It’s not the right way to grow a business, generally speaking running a business is alot like running your own personal checkbook. You spend what you have, you don’t spend what you don’t. If you must borrow, you borrow what you know you can pay back.
Taking VC is like going to your credit card company, taking a cash advance and buying stuff that you think you could sell at the next flea market. It’s a risky option that could bankrupt your firm, your ideas and your dreams.
Don’t get me wrong, but reading many horror stories on VC, we have look at all VC like making a deal with the devil.. in the end, you might not get what you bargained for.
Someone convince me that I am wrong.