Harvard Business Review: VC Funding Can Be Bad for Your Startup
Don't tell Acumen Brands founder John James, but a Harvard Business Review blogger believes VC funding can be bad for your startup.
Of course, most techpreneurs struggling through the valley of death probably wouldn't mind a little of it.
Still, John Mullins in the HBR blog points out a few potential negatives to VC funding.
A sample:
...But the vast majority of successful entrepreneurs never take any venture capital.
Take Claus Moseholm, co-founder of GoViral, a Danish company created in 2005 to harness the then-emerging power of the Internet to deliver advertisers’ video content in viral fashion. Funding his company’s steady growth with the proceeds of one successful viral video campaign after another, Moseholm and his partners built GoViral into Europe’s leading platform to host and distribute such content. In 2011, GoViral was sold for $97 million, having never taken a single krone or dollar of investment capital. The business had been funded and grown entirely by its customers’ cash.
In fact, venture capital financing may even be detrimental to your start-up’s health. As venture capital investor Fred Wilson of Union Square Ventures puts it, “The fact is that the amount of money start-ups raise in their seed and Series A rounds is inversely correlated with success. Yes, I mean that. Less money raised leads to more success. That is the data I stare at all the time.”
Interesting. Full post here.