For any of you who may know of any or have had experience with any Venture Capitalists - what's the good,the bad and the ugly with getting funding from them? Anyone care to comment or share expreiences?

Thanks,
Warren

 

the good - they have deep pockets

the bad - if they give you a crap-ton of money, it becomes their company - what did you expect?

the ugly - these people invest in operations looking for a big payoff to offset the bad investments, meaning: if your business plan doesn't include profits in the tens or hundreds of millions, you won't be turning anyone's head. There are all kinds of funders out there, at varying levels. The more money you are asking for, the more control these funders will demand, and the more you have to demonstrate viability. It isn't like you just go into an office, calmly ask for ten mil, and walk out with a check with no strings attached - you are quite literally selling your business - don't expect to be around when the big payday comes.

 

isn't there another type of funding source besides venture capitalist like angels?

 

Angels can also be a source of funding, but their investments are usually much smaller than venture capitalists. At least their pockets aren't as deep, unless you know bill gates. Usually, angels fund seed money, which is used to build up/firm up business plans to something more viable that you can take to VC's. At least that was the process that I was exposed to.

 

If you also need resources (engineering people, etc...) you may look at colleges with some type of venture capital program. My old school has a venture capital "company", and they can supply engineering students as cheap labor, as well as the dough. There may be/probably are other schools with such programs. Here's a link to the one at my old school. Not sure if this would be able to help your or not, but just in case

www.rhventures.org

 

Yup, what he said. VCs have a ton of money and invaluable Rolodexes full of contacts, but they're extremely uuummm "mercenary". They'll want a big chunk of your business and expect to see results quickly. In general, most startups are able to get round B funding, but things become tougher after that. Of course, the hard part is even getting your plan noticed and funded for round A in the first place...

That having been said, it's hard to do anything serious nowadays without VC backing. The only alternative is to scrape up whatever you can from angels and your own assets, but of course that sucks because then you're taking on the entire risk and have less overall cash to work with.

Good luck! Btw what kind of business are you going to start?

 

One thing to keep in mind is that if you plan to start a company that will focus on product development there are government grant sources to fund these companies throughout the development stages of the product. Of course grant application is a tedious process but in the long run it's very good money without the worry of Frankie and Vinnie coming to collect at a later date.