Have you taken VC money or angel investor funding for your enterprise? At what stage? What has been your experience so far?
I know Joel advises against it and hasn't used VC money so far, and I thought of taking the same route as well. But I am at crossroads just now and it seems tough making that decision because I think I need that money to make some things that I have in my head happen.
Is it possible to get away with 100% funding from VC and give them a 5% stake in the business?
$$$ for 5%? Not going to happen unless you get the third F type investor (Friends, Family and Fools).
We talked to a couple VCs and they both have been pretty upfront about "don't take money if you really don't need it [we don't] because it put a lot of pressure on you and your business."
I appreciate their honesty, because they could have easily gilded the truth.
Taking money from a VC can be a good experience. Many VC's have the expertise to act as "training wheels" for your business. One can take advantage of a VC's business experience, resources and contacts to help set up your company's infrastructure. Another advantage is they can help teach you how to use the ratios that directly effect your business to determine whether or not the "numbers" in your company are working. Additionally, they can sometimes be a great exit strategy and allow you to go start another company or build another mousetrap.
It's a good idea to let your long term goals and objectives help determine whether you should use a VC or an Angel. Consider what's most important to you. Do you want the money (so maybe you can do something bigger later) or do you need to control the show? The answer to that question can go a long way toward figuring out which approach is best for you and your company.
The later you take investment the higher valuation you will get. Finding the right angel investor is the most crucial thing, my suggestion is you may want to consider non-profession angel investors, but this investor must really understand your business, believe you and will provide you other supports.
Professional angel investors treat ROI their first priority, so that you may be under lots of pressure.