Startup Funding Always Comes With This Catch
And it’s the one big reason why you shouldn’t seek venture capital too early
In this week’s issue of Teaching Startup (#67), I answered a question from a second-time entrepreneur about accepting venture capital funding that would ultimately put his product on a different path than the one he believes will make his startup a billion-dollar company.
While I was answering the question and laying out some negotiation options, I noted that this scenario was not unusual. Far from it, in fact, I’m hearing this more and more from entrepreneurs who are seeking outside funding. The general consensus is that seed money is cheap right now, but I don’t think we realize how much investor expectations have ratcheted up as the cost of money has come down.
In this post, I want to talk about those expectations.
There’s Always a Catch
Well, for sure, there are always several catches when it comes to accepting outside investment for your startup, but there’s one I see more often than the others and it’s usually the most problematic.
Here’s what I wrote in the middle of the answer:
“I can tell you this. With the exception of repeat founders who already have credibility…
