The Hustler's Digest StaffThere are many things a founder should be aware of before going out to raise capital from VC’s. The choice to give up a piece of your company often comes with giving up control. This choice can be a big one for founders who are passionate about following their vision for the company. Sometimes founders might not actually need to go to VC’s for funding however they might need a VC to make an intro to someone they otherwise would never have had access to in order to take their company to the next level. That’s why it’s crucial for founders to ask themselves these 3 things to look for when raising capital from VC Investors.
1) Am I ready to give up some control of my company?
There is a large amount of capital in VC ready to be deployed but often founders don’t realize that taking VC funding also comes with new business partners. Hopefully, those VC’s investors have experience and connections with other people in the industry. One good rule of thumb, if you are looking for funding, is to determine if you’re looking for money or to bring on a partner who has money. If you just need money, get a loan. If you want a partner and money, then venture might be the way to go.
2) Do I actually need fundraising?
Maybe your startup is doing just fine without the help of VC funding but one day you wake up with a financing offer from a VC. Is it really to your advantage if you take that funding? The VC might pressure you to take your business in a new direction or dictate what you can do with the funding. A good rule of thumb is to continue to operate without taking venture funding if you can do so successfully. If you really think you could use extra funding, then try to go with a loan if you don’t need necessarily need the funding to continue operating successfully. This is one of the 3 Things to Look for When Raising Capital from VC Investors. This article speaks about how to fundraise without stress.
3) What is the value add from the VC’s?
Finding a VC that brings something to the table other than funding is important. For example: can they make warm introductions to industry experts that can help you bring your company to the next level? This is one of the 3 Things to Look for When Raising Capital from VC Investors.
