Should I raise Cash?

AdvisorGarageAdvisorGarage Posts: 10subscriber
edited March 2007 in Startup Funding
I have a question for the group and would appreciate input.
We`ve launched our site and its growing well.  Overheads are minimal so we don`t need a lot of cash.  Having been `burnt` through two startups already (angels and VCs) - I wanted to do startup #3 without outside funding this time around.
But an organization has reached out and offered cash for equity - like I said, we don`t need much cash to survive and could get by without outside funding but their `pitch` is..."you owe it to the concept and the members to raise cash and `take the business to the next level`."
Am I being stupid or selfish by wanting to do it without outside funding? This may seem an odd question but I`ve been mulling it over since these conversations...
Andrewhttp://www.AndrewIve.com</A>
 AdvisorGarage2007-3-14 10:54:13

Comments

  • MNGrillGuyMNGrillGuy Posts: 2subscriber
    Never pass up a good deal.  But only you will know if it is a good deal. 
  • rvdebbyrvdebby Posts: 11subscriber
    I don`t understand. When I visited the links that you have on your post they both go to start up education, funding, etc. You are in this business--but have to ask this question?
    I smell a shameless plug coming on.
  • AdvisorGarageAdvisorGarage Posts: 10subscriber
    Absolutely not!  I am in this business in so much as the site brings people together.  BUT I feel very jaded about the challenges you sometimes encounter working with some angels and VCs.  We had five angels in company #1 - three were great but two were extremely difficult.  With company #2 - we secured funding from two VCs - one was extremely helpful and mentoring - the other kept dropping in on a weekly basis and constantly flip flopped the strategy as they saw fit. The challenge is you don`t know if you have a good angel or VC until you start working together.
    So, should I bite the bullet, suck up my nervousness and take the cash so we can ramp up the websites functionality and exposure or stay the course and let the business grow more naturally (ergo without a cash injection).
    This is absolutely not a shamless plug - People can give their feedback without needing to see the site.  Its just my regular signature...
    Andrewhttp://www.AndrewIve.com</A>
  • AdvisorGarageAdvisorGarage Posts: 10subscriber
    We are gaining about ten new members a day.  The question is what additional functionality would add even more value for members and how much does it cost to deliver.  Also our marketing budget is zero so this is all word of mouth growth - cash would allow us to advertise.  Giving up a little equity is not a concern - its having people involved in the decision making which gives me concern...
  • SolidGrndSolidGrnd Posts: 11subscriber
    Can you do the deal with a stipulation regarding the decision making processes!?
    Sorry if that sounds naive...not familiar with these types of deals...but it seems like an easy wording insert for the contract that would ensure you retain control of the decision making...at least to an extent!?
  • AdvisorGarageAdvisorGarage Posts: 10subscriber
    Thanks!  Yes, I can `control` the equity and therefore be the ultimate decision maker but my understanding is that investors in an LLC becomes `members` and members have rights.  I am yet to find an investor that wants to hand over cash and not have an input.  Should I just put up with this for the sake of getting a cash injection so we can step change the functionality and services provided for customers?
    Who would take the cash and who would go it alone and be the master of their own destiny?
    Andrewhttp://www.AndrewIve.com</A>
     
  • SolidGrndSolidGrnd Posts: 11subscriber
    I would have to say that if you don`t know the true nature of the relationship and can`t honestly say you could see the visions between you and your investor being at least close thus making decision making fairly painless...then if you can go it alone...DO IT!!
    There are a ton of companies out there who don`t have the luxury of facing their future without investors...and they are forced to hand over control of their decision making to anyone who is willing to offer up the funds. You are not in this situation from the sounds of it. It sounds to me like your choice is a bit simpler really.
    I run a nonprofit...and I asked my initial board members to be a part of this endeavor because I knew that even though occasionally they would feel differently about a current decision that had to be made...the vision and our mission would be the same...we wanted the same results from the organization. If you can`t look at your potential investor and say the same thing...then be free of the potential stress that it would cause and go it alone!
  • pagejamespagejames Posts: 1subscriber
    I agree with the majority here!  Keep your company and your sanity if the company will accomplish the growth on its own, albeit at a slower pace.  Patience is a virtue.
    P.S. I like the quote in your signature Craig about binary!
  • AdvisorGarageAdvisorGarage Posts: 10subscriber
    I really appreciate everyone`s views...some great points here for me. SInce this discussion started a few more potential VCs have come forward...will need to determine what it will mean to quality of life too if we go that route.  All good fun!
    Andrewhttp://www.AndrewIve.com</A>
     
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