@thefounderadvisor: I have raised $250M for my start-ups and I'm going to share what I wish I would have known before I took venture capital investors. 1. As I have mentioned in my other videos, you can be fired. Yes, even if you're the founder who started the company. When you take venture capital, you will generally be required to give a board seat to each investor that puts capital into the company. Once you have a board that can technically outvotes you, you can be exited from your own company. And, it doesn’t matter if you own 51% of the company. Check out my video in the comments to learn about why this is. 2. Secondly - you're going to sell or IPO your business. Venture Capitalists don't want to hold onto to stock in your company forever. They need to pay back their investors. Therefore, they need you, their investment, to have a liquidation event. That means a sale or IPO so they can return funds to their investors. 3. You're going to spend a tremendous amount of time doing nothing related to building a great company and having everything to do with managing things that related to taking capital - prime examples include running board meetings and managing board members and investors. All are massive time and energy drain and provide little value back to your company. 4. You risk not making any money, even if the company sells for millions of dollars. This is because of a term VCs impose called a liquidation preference. A term that allows investors to get all their money back before you get any. Check out my video in the comments to learn about liquidation preferences. 5. Lastly, you generally cannot sell your equity, and therefore make any money, until the company sells or IPOs. Because VCs will attempt to have something called blocking rights. The average IPO or sale time for a venture backed company is between 6-10 years - therefore it will be a long time before you get paid, even if your start-up is worth a billion dollars. Many of these items can be mitigated if you include the controls that I mention in my videos when you incorporate your company. If you need help doing that, I have an incorporation package that includes all of those controls. Just DM me to hear more. #founder #founderadvice #startup #startupadvice #venturecapital #fundraising #venturecapitalists #venturecapitalist Comment if you have any questions about fundraising, venture capitalists, or any other questions about founding a company.

Ryan | Startup Founder Advice

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Monday 24 June 2024 15:21:40 GMT