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JA Westenberg

The biggest mistake venture capital funded startups make is accepting venture capital funding

Petras Kudaras

@Daojoan The first mistake they make is prioritise chasing the dream of taking over the world without building a solid profitable business first. There is nothing wrong in building a profitable self-funded 10M business, you don't need to lose independence and take in external funding to chase unicorn status that most of the time never materialises.

Jan 29, 2024, 01:50 PM·Public·Web
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Bob Davidson

@petras @Daojoan

We’ve been running this way for 14 years. It’s a different kind of stress (keeping business going, paying rent) but with freedom to make a contribution the way we see fit. Running a business gives you a different, more humble perspective. I’m impressed with the hot dog stand on the corner that’s there year after year more than some of the SV startups I’ve seen.

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Petras Kudaras

@wa7iut @Daojoan I'm in the same camp, though people may call me too conservative.

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Bob Davidson

@petras @Daojoan

I prefer to think of it as "honest and hardworking" vs. "ponzi scheming," but that's me. I was raised in the old HP when Bill and Dave ran things.

youtube.com/watch?v=nrwltVE1jm

YouTube企業理念”HP Way” - YouTubeBy Hewlett Packard Enterprise
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Slyence 🥥🌴

@petras @Daojoan there are businesses for which that works and there are businesses for which that doesn't work. anything fundamentally human driven eg b2b services/consulting yes VC is a terrible idea, but an online application? another story

I think you are also discounting how much expertise VC firms bring in to organizations to help them scale up. Two guys in a shed know shedding all about setting up a back office and a marketing/sales team with a go to market strategy

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Petras Kudaras

@Slyence @Daojoan I have seen quite a few break-even businesses that were ruined by aggressive push from VCs to scale up the marketing efforts and go big. It would have been a nice small profitable business to retire on.

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Slyence 🥥🌴

@petras @Daojoan sure, but nobody is forcing you to go take VC money

you pitch to the VC groups because you want to roll the dice on an eight+ figure payout

like the VC guys aren't barging into a business and holding the owners at gunpoint demanding that they accept 5 mil in series A funding

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Slyence 🥥🌴

@petras @Daojoan actually that sounds like a pretty funny show

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Petras Kudaras

@Slyence @Daojoan and actually yes, business angels do push for investment when they find a hopeful business. VCs with series A come later. And then the burn rate becomes so big that you need another round, and another one, and another one to keep afloat. By that time you have no other option but high growth — noone wants a down round and the cost base is too large to keep going from your own cash flow.

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Petras Kudaras

@Daojoan @Slyence then interest rates go up, growth rate slows down, funding disappears and everything is left in ruin.

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Slyence 🥥🌴

@petras @Daojoan that sounds like a conversation that should have happened when the angel investor supplied funds at the outset?

what will this money cost should be objective #1 to figure out when you meet with a potential investor

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Petras Kudaras

@Slyence @Daojoan right, so this assumes that the founders know nothing about setting up back office, marketing, sales and strategy, but somehow are very knowledgeable about financial deals and the consequences of going down the VC route.

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Petras Kudaras

@Slyence @Daojoan Disclaimer: I have worked in finance as a fund manager for a decade so I do have some understanding how stuff works there.

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Slyence 🥥🌴

@petras @Daojoan I don't know that we are going to be able to come to common ground on this

I think it's basic sense to ask what investment entails ahead of signing an agreement to sell X% of your company for $Y, like what this person will expect from you and what their exit plan is.

I think that's a much more reasonable responsibility for a company owner than them figuring out how to build a whole company that complies with relevant laws and regulations and operates profitably,

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