Startup-style: Lifestyle or VC?
July 30, 2008
I am catching up on my reading and ran across a post from Tony Wright titled, “Followup Answers re: Lifestyle vs. Investment and Angel vs. VC.” It is a well thought out post following up on his presentation at Seattle Tech Startups. He has a few interesting points including this one:
I think people chase VC because it’s available. Angels are purposefully elusive– they don’t exactly hang out a shingle saying, “I’ve got $50k burning a hole in my pocket”. VCs, on the other hand, have a web site, and processes to handle/process deal flow. They almost always want to lead the investment by negotiating terms and putting in a big chunk of the money, while angels sometimes shy away from leading/negotiating, but are happy to pile on with other investors.
He is onto something. Some of us think VC investments are the only game in town because it fairly easy to understand. Raise money, build business. The alternatives are harder, especially for young would-be entrepreneurs (or for established W2 folks with families). Don’t just seek venture capital (especially in Dallas) just because that is what you know. Consider alternatives. Do you really need the money for an office or a desk? I bet you can find one for free. Do you really need money for bandwidth and colo? I bet you can find some for free. There are lots of way to get your idea out of your head without raising venture capital. Consider looking for angel investments. Start hanging out with the people who can help you - i.e. other entrepreneurs. Share your ideas and get in the game. Raising money is hard, do it as a last resort…
