When you take VC funding, you're put onto an 18-month cycle: 12 months to grow your KPI's, then 6 months to raise the next round of funding.
Remember, the VC business model is 9 out of 10 investments fail and the last one makes at least 10x returns. Your probable failure is built into their spreadsheets, and if you don't believe/can't execute your 10x hockey stick story, they're going to cut you out at month 16. 2x growth is failure. 4x growth is an acquihire into another one of their portfolio companies (with the 4x profits going to their liquidation preferences, not to you). 7x growth and maybe they'll toss you a (dilutive) "bridge round" to buy you another 4-6 months.
VC funding is great if you're willing to commit to that game, but make sure rapid growth at all costs is the game you want to play. "Lifestyle business" is often used as a pejorative around here, but the reality is the average founder can make out just as good if not better owning all of a smaller pie than a down-round-diluted large pie.
If you want to play the VC game, understand the constraints and requirements you're committing to. It's a tool, and just like any tool, make sure you're using it for the right job.
Thanks!
If things are going great, your previous investors will want to exercise their follow-on participation clauses (lets them put more money to maintain their percent stake at same terms as the new investors). Although lack of participation isn't necessarily a red flag (there are legit firm-specific business model reasons not to follow-on even if things are going good), it might still raise eyebrows ("if this is so great, how come your other investors aren't participating?").
Good investors open you up to their networks. If they're not taking your calls nor making intros to later-stage investors, that's a really bad sign (there still is an incentive to continue the game so portfolios look better even if things are just okay, so this one's hard to judge).
When things aren't looking good, they might pressure you to sell so they can cut their losses. Maybe they'll bring in a new CEO who's job it is to sell the company (that's why they demand board seats).
When things are really bad, they can pull out any remaining money. I haven't experienced this one and don't really understand the mechanics, but maybe someone else can chime in?
The CEO answered the question for me:
> A company takes investment so that it can grow faster than it can with organic growth.
So, if you're happy with organic growth, avoid outside investment. If you want (or need) to grow faster than you can with organic growth, then you need outside investment, (and the maturity and willingness to adapt as your company changes.)
For what it's worth, this also depends on what kind of business you're in. If it's something that can grow fast, someone might point to your startup to justify demand in your space, take outside investment, and grow so fast that they push you out. (Hopefully your "organic" company could figure out a way to cash out before your customers flee to the well-funded competitor.)
Otherwise, If your business is niche, the market might not be big enough to justify investment, and you can continue to comfortably grow at your own pace without risk of a well-funded competitor eating you for breakfast.