Why Your Startup Doesn’t Need Venture Capital
Advice on what to consider in growing your startup venture.
Advice on what to consider in growing your startup venture.
Original article was posted on Inc.com.
With the popularity of entrepreneurial shows like Shark Tank and the influence of tech news headlines, there is a growing misconception that to succeed as an entrepreneur, you must seek venture capital. Contrary to popular belief, this is not true.
Sure, the proven venture capital financing route yields its benefits, such as million-dollar checks, business expertise, active support, and new connections, but it is smart to consider all options before settling on a final decision.
Here are five important questions to ask if you are considering a venture capital investment:
1. Do you understand the motivations of venture capitalists?
Investors are motivated by winning big. Thanks to the venture fund business model, they are substantially incentivized for hitting home runs by betting on the right companies.
This is why investors make risky bets into startups that have the potential to soar and become billion dollar companies. Funders gain a tremendous amount of upside if your startup is sold or becomes public through an IPO.
2. What is your definition of success?
Before your founding startup team considers investors, seriously take the time to think about what success means to your team. Is the ultimate goal to build a service that changes the lifestyle of everyday people or to develop a product that changes the world?
Many budding companies are valued at $1 million or $50 million. However, they are not always venture backed companies. In the venture capital world, firms are not looking to invest in singles or doubles, but to hit home runs.
To see the final three questions go to Inc.com.
Earnest Sweat is an Entrepreneurial Engineer for Camelback Ventures and Investor in Residence for Backstage Capital. If you have any questions or requests please connect with Earnest through LinkedIn, Twitter, or AngelList.