A recent New York Times article highlighted a movement amongst start-ups away from traditional VC funding. Here are the takeaways:
- Start-ups and VCs are on different wavelengths when it comes to business strategy and trajectory
- VCs encourage rapid expansion, which is in some cases counter to the start-up’s business goals and can be destructive
- The model supports great returns for early investors
- There is a movement against the traditional VC model. One that supports a more ethical industry and greater diversity.
- Big problems occur when founders sign on for an outcome they didn’t know they were signing on for
Rooney Nimmo has been in the trenches with venture backed founders. Here are a few things to consider:
We have always advised caution when raising money. Consider your growth strategy and choose funding alternatives that support that model. If you go the route of traditional venture funding, make sure you know what you’re getting into, what your exit looks like, and how your employees will be treated. Keep in mind that your interests and those of your investors are likely vastly different. Protect yourself from the outset. Drop us a line here if you need assistance.
