Anybody read this?

[fattony]

Thought this was kind of eye-opening, especially as so many people around here seem to require start-up capital lately.

http://uk.biz.yahoo.com/18072006/244...-bad-ugly.html

[nochance]

And some people thought vc funding has a cherry on top with iceing all around.

I like this bit...
Egos. Disagreements about strategy often arise between the entrepreneur who is on a mission to change the world, and the venture capitalist who can do no wrong. Like entrepreneurs, VCs aren't created equal and they often know less than the entrepreneur about the product, customer needs, and market opportunity.

Dragons den there was these 2 guys who wanted to use the investment to pay them selfs 16k each a year, guess what they lost the deal, messed it up, even tho they struck up interest from the vc's.

People, looking for this kind of startup or any kind of capital - where is your exit strategy!

[fattony]

LOL - I was one of those people who thought VC was win-win situation. Loads of financial support and guidance.

But I never released (and i dont think many people do) that they have such tight regulations on everthing. They can even sack you as CEO if you're not performing.

[nochance]

Would you have tight regulations on your money, i would.

Its a dog eat dog world out there if you mess up.

Que akula... hahaha

[fattony]

Lol. Yea Akula should be round soon.

[akula]

sure, I'll put in my 2c

as a rule of thumb - unless you have a lot of connected friends, you're on your 3rd start-up and have resided in Silicone Valley, New York or some other start up hot spot for the past 20 years - there's no way you should take external money.

Why? Because it's going to be hostile. Money is not created equal. Most of it is hostile and some of it is friendly. Unless you are a friend, you're gonna get hostile money.

It's quite simple really - unless there are interpersonal relationships at work which prevent the financier from taking the company hostage and eliminating the founders - that's what's gonna happen.

At the end of the day, the game of venture capital is basically divide and conquer. The vc has to come in and manipulate the situation to turn founders against each other, so he can get rid of them one by, give the equity to his friends and put them on the board and management positions.

And this is not deceptive or evil or Machiavellian. It's just how the industry works, and you'd do the same thing if you were a venture capitalist. The net result? All first time CEOs are weeded out and eliminated, companies become managed by serial entrepreneurs, and all the created wealth stays in the club.

The club is what's important here. The entrepreneurial ecosystem and how it must repel alien infections (i.e. first time ceos) in order to stay healthy and viable.

It's the way things should be, and once you're in - it's a good club to join.

[nochance]

Have you ever known startups or existing businesses, to rather than use vc, use advertisers, to fund a paticular part of the business.

[akula]

Sure, seth godin started his publishing business by giving away his books for free but charging advertisers to put their messages in between the pages.

That's just one example. There is a lot of very smart people out there doing very smart things to finance their companies.

Aristotle Onassis is fantastic case study, but movie producers are the undisputed masters of financing start ups.

Quite regularly, these financial contortionists finance multimillion dollar productions (which can easily flop) and where ALL the money has to be paid up front (not like start ups where money is invested in tranches) with nothing more than the brilliance of their skill at convincing people (and following some rules).

If you really want to see how a person can raise millions of dollars with nothing more than a plan (a script in this example), you might want to read up on how movie producers do what they do.

Tip: it's different to what you think

[nochance]

You have just hit the nail on the head.

Do you have any links of any case studies...

Thanks

[akula]

sure, try this:

Entrepreneurial Megabucks: The 100 Greatest Entrepreneurs of the Last 25 Years

http://www.amazon.com/gp/product/047...468739?ie=UTF8

This is a monumental book written by a demi god. It'll show you how 100 of the greatest entrepreneurs financed their companies. Note - none of them did it with venture capital.

[nochance]

Will get in contact with you soon, for best advice on something you may find interesting.

Thanks for the link... my kind of reading.