Cons of raising venture capital?


2

Everyone talks about the benefits of raising money.

What are some negatives of being a funded startup?

Funding Venture Capital Startups

asked Mar 1 '14 at 11:31
Blank
Linda Peterson
60 points

2 Answers


3

Here some cons (some of which you can avoid):

  • Raising money from the wrong investors will be a nightmare. Check reviews of investors on TheFunded and AngelList before even pitching to them. You want investors who can help grow your business with their reach.
  • Time commitment needed to raise capital is pretty much a full time job in itself. Early on, you want to spend all your time creating a great product, marketing it, and hiring. Raising money is a time consuming process.
  • Giving up too much control of your business. You can avoid this by not seeking funding too early. Try to delay it as long as possible. Grow your userbase and revenues. So you can keep a larger piece of the pie for yourself (and control).
  • You and your business are under greater scrutiny. Going back to the first point, this is why you want to avoid raising money from the wrong investors. You want investors who will provide you access to their contacts to help you grow, but then get the hell out of your way and let you do your thing.
answered Mar 2 '14 at 03:19
Blank
Nishank Khanna
4,253 points
  • Great insights regarding networking and timing. This answer is much better advice, especially given that you provide good ways to avoid these pitfalls. – Garet Claborn 3 years ago
Add Comment

0

Primarily, loss of total control and the costs of reporting to the investor(s).

answered Mar 2 '14 at 02:20
Blank
Garet Claborn
322 points

Your Answer

  • Bold
  • Italic
  • • Bullets
  • 1. Numbers
  • Quote
Not the answer you're looking for? Ask your own question or browse other questions in these topics:

Funding Venture Capital Startups