Marc Andreessen’s latest post on financing is long, but has some good tidbits. Don Dodge offers some equally good advice here.
You can clearly sense that the tone in the advice of these accomplished gents (Andreessen needs no intro, but Dodge has worked at five of the most notable startups you can think of over the past 10 years… oh, he’s now at MSFT, too) is that entrepreneurs should not take in too much money. Which, indeed, says a lot about the times.
I have worked at 2 VC-backed startups, this is the first company I start and it’s self-funded (I did try earlier on to raise VC thinking it was a seal of approval but then realized content is not really high on VC’s priority list, that’s changing, perhaps, but not fast enough)…
I’m extremely grateful for being able to do that, though self-funding a startup is a unique, gut-wrenching and to some extent, reckless thing to do. It can reward you emotionally and financially beyond your wildest imagination, but it can scar you too. Don’t get me wrong, when I say “come hell or high water” we’ll be successful, I mean it. And, thankfully, it’s happening now before my eyes. Last year our company had a near death experience, but that had nothing to do with operations or finance, it was due to other people’s greed, arrogance and, well, assholeness. If there’s no such word, the people I’m referring to in this post describe that term.
Anyway, with that behind me, nothing could stop us. Some entrepreneurs might not be able to get off the ground, which is a shame and why I’ve said that I’ll help any entrepreneur get off the ground to the best extent I can…
And, naturally, all entrepreneurs will consider VC. I think you have to be careful not to be dazzled by having VCs come on board too soon. The aura of saying we’re VC-backed is considerable, but having worked (via business development deals) with hundreds of VC-backed firms, I cannot tell you how many seem to make 180 degree turns, either when the VC’s risk appetite falls or when a new VC comes on.
Build your company as much as you can, then let VCs come to you, and even then, only accept money if it’s on your terms. Otherwise you’ll be forced to change your game plan, and you might be on the outside looking in.
Yesterday, I got an article link somewhat randomly and this is very pertinent to this theme:
I have no idea who Eric Picard is, and I really have no clue how his article landed in my inbox via a Google News Alert for a seemingly unrelated keyword, but am I glad it did.
When you read that, right or wrong, think of people like Peter Adderton of Amp’d, whose name from the website’s management page before people got to work at the company the Monday after the power struggle. Or, think of Brad Greenspan trying to sue News Corp. over the eUniverse/Intermix/MySpace deal.
I don’t know these people and am not passing judgment here, I’m just saying it takes a lot of cojones to start a company and build it. It also takes a lot of mojo to get people to pass up a safe, cushy corpoarte gig. Having all of that go up in flames because a bunch of VCs suddenly have a change of heart is probably more gut-wrenching than anything else. I had to put up with assholeness last year, trust me, I won’t even put myself in a position to have to put up with it again. If I have to, that’s one thing, but if I don’t have, why bother?
I’m usually the one who thinks big, but I’ve realized that your definition and methodology to get and remain big is not one and the same as a VC’s. As an entrepreneur, you are akin to a parent, you want to plant the seed so your child goes on to greatness, but a company, unlike a parenting lineage, is bound by contract. A VC is quite different: they’ll invest in 10 companies knowing most of them won’t grow up into young adults (I’ll spare the more violent imagery, but run with that analogy).
Investors don’t care about the greater good; they care about making their investment as great as possible, and if that means you the entrepreneur needs to be the casualty thereof, they don’t care.
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