Everyone wants to raise VC.
But it is far more likely to set your company up to fail than make you a billionaire.
Here is how the VC game works & alternative money sources for growing your business:
1. VC Odds
Venture Capital funds invest in startups with high growth potential in large addressable markets.
They are shooting for home runs.
- 5/10 deals lose money
- 4/10 break-even to small wins
- 1/10 return a multiple of the fund (if lucky!)
Outliers are the goal.
2. Failure
"Go big or go home"
VCs expect failure most of the time.
It's their portfolio strategy. They win with the outliers that generate
huge returns.
Companies are pushed to "shoot for the stars or die trying".
Founders don't plan for failure, but it is the likely outcome.
3. Risk it All
Many businesses that could have thrived over time, get pushed to grow too fast and pivot to find a large addressable market.
If they didn't raise VC, they would have grown into good sustainable businesses with time:
- Win a niche
- Provide value
- Enjoy profits
4. Alternative Equity / Debt:
Tons of investors are happy with steady realistic growth.
- Indie PE funds like Verne
- Revenue-based lenders
- Individual investors
- Ad spend lenders
- Friends & family
- Family offices
- Bank debt
Make sure you are aligned on values & incentives.
We are sadly going to see a lot of good companies fail over the next year that would of been fine without VC.
We offer a soft landing for these VC-backed companies at Verne if you want to talk. DMs are open.
I can give recommendations to other good lenders as well.
If you are interested in buying, growing, and selling small companies, check out my course & community on it at IndiePE.com.