Do you need VC funding?

With interest rates still at an all-time low, money is looking for new places to get returns. As a result, people are looking into markets they previously considered too risky or volatile. Money has gone from bonds to the public markets, from public markets to private markets, and within the private markets, is getting pushed to earlier and earlier stage investing. This, and the success of previous funds amongst other reasons, is causing valuations to explode and capital to be cheaper than ever.

But should you take the money?

Do you need it?

The obvious answer is yes, if you need it. If you need the money to stay alive, it will be difficult to obtain. When it is used to find expansion, particularly rapid expansion to ensure an advantage over your competitors, external funding is almost required, and this potential for exponential growth is where VC firms thrive.

Do you need support?

If you can survive without the additional funds, you have to decide if you want to give up part of your company. There are situations when this is advantageous. Venture capital firms are not all the same.

You may have heard the phrase “not all money is equal,” and that is the case here. Some VCs will provide funding but no additional help. Others will get down there with you and help you build your company. So, you have to decide what you want. First time founders could be served better by having a VC that is more involved and can guide them.

Do you need a known brand behind you?

Another reason to take VC money is to become associated with the firm’s brand name. All startup ideas have a little bit of crazy in them. If your vision for the future is so radical, having tangible proof that someone else believes in what you are saying can go a long way.

People are great at following other. It’s what makes entrepreneurship and starting your own business so hard. Once you obtain that first funding or bring on the first partner, the next one is almost always easier.

So, what do you do?

Before taking on funding, be sure of what you will do with the additional funds. Find a partner that can assist you in moving the business forward. And find someone that believes in you and will put in the work to improve your company’s image.

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