Financing is a big deal. But for a start-up there can be more risk for the start-up taking VC money vs. leaving it, or vs. an established firm getting some infusion or other. The start-up isn’t proven for one thing and the founders ideally best know and define the value proposition. VC money equals less input from such founders, and at a life cycle point where it counts hard. Secondly, the fullest benefit of on-board talent isn’t manifested at start up but over a longer term. So VC money like a lubricant removes essential early grit and operationally can short circuit a valuable valuation process while ironically aiming to affirm it.
Young entrepreneurs often value VC money on its face. But VCs can be outright liabilities, as is rarely taught. For one, pitching to a VC requires knowing their portfolio. For your start-up’s proposition can be usurped by VCs with vested interests elsewhere in business material to your start-up’s valuation. I.e., VCs can use their perch to learn how to manage their own portfolios, not invest in your team. There’s an argument they should. The counterargument is if they can, you don’t have an idea. And the counter counterargument is if you don’t have an idea why are they listening.
In short, neither getting a hearing with VCs nor having active bidders is gold. Or need be. As described here.
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