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VC and Angel investors and business models

Hi – for those that have direct experience either taking VC/angel investments or actively pursuing them, it would be great to hear your insights. From everything I’ve read, here is my current impression:

Pros:

  • Provides capital to bring in resources and build/grow faster
  • Brings in business expertise having worked with a lot of startups and growth companies
  • Will push you to “think bigger” in terms of a bigger market and more monetization
  • If your idea of success is to build something fast and then sell it or take it public, that’s their goal as well

Cons:

  • Takes a lot of time finding one, and odds are seriously against you
  • They’ll push you to spend money to achieve rapid growth and attract the next round of investors. If your growth isn’t high enough to attract more investors, you’ll likely have to shut because your cost base is too high.
  • If your goal is to run a business longer term, in the unlikely event that you do survive and scale, then they’ll push hard to monetize the investment - that usually means selling the business to someone else.

My general takeaway is that if you have a big, expensive “change the world” idea or your goal is to be a “serial entrepreneur” and keep launching businesses until one becomes a unicorn, then you should be pursuing VC money. But if you are focused on a smaller, profitable business that is sustainable, then the decision is harder.

I found this video interesting

My general takeaway on the difference between a small business and a startup is similar to what you have expressed…I also believe you passion for the industry you create for…those who are only passionate about ‘disruption’ and ‘serial entrepreneurship’ are looking to be in and out, and do not have a desire for a life long career in a particular field. If, however, you do have a real passion for a particular industry or product, your goal may be life long, which leans toward creating a small business that doesn’t need to continually grow and look for new funding and instead would actually have to be profitable to continue.

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