What to do when VCs come knocking at your door..?

startup-vc blogSo you’re a startup who has an amazing, unique solution that’s gonna hit the niche with a bang or has already taken the market by storm and is now “the talk of the town.” Obviously VCs also have, by now, heard about you and they come knocking at your door with bags full of money. What next..?

Here’s the checklist: First – You need to know about yourself, whether you’re a Bull or a Bear. Yes, like in the stock-market, there are people with different ways of looking at businesses. Check this out how different can be founders’ views about getting funded:

“Bootstarpping allows the founders to retain substantial skin in the game.” ~ Nemesh Singh, founder Appointy – bootstrapped for 7 years.

“It is like rocket fuel. You can expand at a faster rate with better access to great resources.” ~ Girish Mathrubootham, cofounder of Freshdesk.

growth hacking vc blog Next: Ask yourself – Am I getting funded too early or too much..? Why am I in such a rush to find a new boss who may be worse than the old boss (that is, if you’ve sacrificed a corporate job and a consistent pay-check to be an entrepreneur). Sometimes a VC-led intervention early in a startup’s journey may not be in the best interest of the venture.

  • The Benefits: VCs are an experienced lot – guys who’ve been there, done that. They’ve seen startups succeed and fail so they’re good at mentoring. While you might become emotionally attached to your venture; VCs bring in objectivity. OK you have a great idea but networking – which is a forte of of VCs – helps take the business ahead. You’re brilliant at ideating but when it comes to hiring the best talent, it is usually the experienced eyes of the VCs that can spot the right guy. A strong financial backing helps get acceptance among clients/ consumers. Finally, by buying into your startup, VCs are buying into an opportunity – as well as the downside. So you share your risk.
  • The Downsides: Every step you take, VCs will be watching you and they have the right to veto key decisions. VCs are not here for charity – their investments have a fixed time-frame so they will exit sooner rather than later. Too much capital ensures you hire too fast, pursue too many ideas, and spend massively on advertising, marketing and PR. Remember Rahul Yadav of housing.com’s nasty public spat with his VC? You can’t fire your VC but a VC can fire you. VCs have a lot on their plate and your startup is just one of their portfolio companies. So you don’t always get what’s promised. Lastly, you are backed by a VC, but statistically, you might fall as only 1 out of 10 startups that get money succeeds.

Take your call!!

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