Why? Some hypotheses:
-- considerable time/resources are sunk in meeting with VC, then jumping through their hoops. The best meetings and hoops are those held with/by customers.
-- you've got to scramble to make lots of money fast to generate eye-popping returns on a bigger nut. It's much harder to generate a 100X return on $10 million than on $1 million.
-- many VC are sheep, so you end up selling the VC a business plan that conforms to yesterday's zeitgeist, rather than tomorrow's.
-- because you are spending OPM, its easy to wreck your company's bottom-line focused ethos.
-- locked into "the plan" you've sold yourself/investors, it's nearly impossible to attend to the subtle breezes that fortell tomorrow's hurricanes.
-- most VC focuses on home-runs, not the accretive base-hits that power long-term success. So what if half a VC's portfolio companies flounder? The VC will double his portfolio's size with monster returns on just a couple of investments. (Tough luck if you or your customers are in the failing half.)
Thursday, March 30, 2006
Could venture funding lower your company’s chance of survival?
Posted by Alice at 3/30/2006 12:34:00 AM