Lifestyle vs. Investment and Angel vs. VC
Last night I spoke at Seattle Tech Startups. Given that lots of people who go to these meetings tend to be wantrepreneurs (aspiring startup folks), I focused on early decisions that need to be be made. Do you shoot for a great lifestyle business or do you aim for a grandslam? Services biz or product biz? Bootstrap it, find angels, or court VCs? And when you answer all that, how do you settle on an idea when you have lots of them bounding around in your head (for this part, I liberally borrowed from Ev Williams
Tags: angel financing, Raising money, startups, vc financing
July 27th, 2008 at 6:42 pm
Good stuff, Tony. My thoughts …
“Given that taking huge piles of VC money both has the dangers you describe and and firmly closes the door on most early acquisition opportunities, why are people still going after big VC?”
Just as there are people who only eat at nice restaurants or only ski when the conditions are perfect, there are entrepreneurs who are only looking at big market opportunities (where selling for $10M isn’t on their radar). For instance, for someone who sold their last company for $100M+ then they might have their sights set on the next one going public and being worth $1B. When you think bigger like that, you tend to only think about bigger investment checks — like, why waste your time raising ONLY $1M and 50k at a time?! Look at McCaw and Clearwire — I’m not sure they even bothered with traditional VC instead going for ibank money right off the bat.
Plus VCs can often bring a lot more to the table than money, if you need certain experience, contacts, etc.
“Can you talk about how to decide whether a business/idea should fall into the “lifestyle” category or the “get funding a go big” category?”
It feels to me that the person/founder(s) should decide this for themselves, not the business. As in, do you *want* a lifestyle business (which are certainly the majority), or do you only want to swing a bit more for the fences. The majority of people in this world decide to have a business that earns them a comfortable living, which is fine. Then there are the nutcases (yours truly) that are only looking at big market opportunities and way different risk/reward ratios. Doesn’t mean one can’t lead to the other, but I think you need to decide what you want first THEN whether your idea fits.
December 10th, 2008 at 3:14 am
electric motorcycle…
I couldn’t have said it better myself….
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