Open Site Navigation

6 Reasons Venture Funding Isn’t Always the Best Goal

6 Reasons VC Funding Isn’t Always the Best Goal

Venture capital funding is to tech startups what the Wizard of Oz is to Dorothy — a longed-for solution to a central problem, imbued with a sense of power and even magic. Many startup founders see snagging VC funding as a major goal. But many end up finding that VCs are too often what Dorothy discovers the Wizard to be: a chimera — extremely difficult to access and possessed of some major drawbacks.

Here are six reasons that getting VC funding isn’t always the most constructive goal for your business.

1. VC is absurdly hard to get


VC funding is hard to get

2018 was a banner year for VC investment. But still, a tiny fraction of businesses actually receive that funding. A start-up founder who turns to a typical VC firm that funds 0.2% of applicants has a far better chance of getting into Harvard Business School than receiving a Seed Round.

2. Seeking VC is time-consuming


Seeking VC funding is time consuming

3. VC is expensive


Venture capital is expensive

4. VCs take a lot of control


Venture capitalists take control of company

5. VCs demand an exit


VCs demand an exit strategy

6. Uncertainty spooks VCs


Uncertainty spooks VCs

VC funding is a great fit for a small number of businesses. For most, it isn’t a great fit and should probably not be a goal. Instead of chasing VC, you may be better off thinking about how you want your business to look, how you want it to grow, and how much ownership you want to maintain, then set your goals vis-à-vis fundraising based on those ideas. Alternate funding approaches like Lighter Capital’s “Capital-as-a-Service” are more likely to sustainably support SaaS startups.

Enjoyed this post? Subscribe to our newsletter to get our latest stories delivered to your inbox.

 

Looking For Funding?


Looking for Funding?

The loan payments are tied to monthly revenue, going up for strong-revenue months and down for low-revenue months. Visit here to see how it works, and if you like what you see, apply for funding today to connect with our investment team!

#VC #fundraising #revenuebasedfinancing #SeedRound #Venturecapital

APPLY NOW