3 major reasons, why I don’t want to see VCs Venture Capital in my business
1) VC value focus is short term (at least for me)
Venture Capital firms focus to create a value in my firm for the next 3 to 4 years. Even four years is a short time horizon for me. I am trying to increase my shareholder value at least for the next 10 year horizon. So we have a different value focus.
2) VCs are not taking risks in consideration
There are always risks associated with mergers, acquisitions and investments. We are changing the chemistry of a business. However, a VC firm will generally only invest in the company and will not let you sell stock and take some profits out in the first step. Even though I am more interested in putting the money in the company, I am wise enough to see that I am taking risks with this move and should also capitalize the risks. Otherwise this wouldn’t be a “fair deal”.
3) A Strategic partner is more valuable than a VC
If you can find one, a strategic partner (or a good customer) is always better than a VC. Imagine that you can guarantee a 50% revenue growth just through a strategic partner. Of course, it is not always easy to find the right strategic partner, and strategic partners are mostly a risk as potential competitors as well.
At the end of the day, it is again all about “economies of trust“. It is usually not who should invest in you, but who you can trust to make your business grow.
A VC with an understanding of these issues, is the best VC to invest in you. I especially like the VC’s which are not in for the numbers game. There are VCs which are focusing on making a dent in the universe. A good start-up will eventually find these better bread of VC’s in the end.
The real issue is; “You want a VC with a cause to invest in your company.” And their real cause of investment should not be making money on your company.