Re:Why to Start a Startup in a Bad Economy (2008)
by O__________O on Wednesday January 18, 2023 @02:51PM
(#34432051)
VC care about three things: percentage of ownership, growth, and a liquidity event.
If a startup doesn’t need the capital to grow, they’re not likely to take on VC funds. If they do, the startup will need to sell equity, which based on funding round have norms based on equity given for capital received. If the startup is frugal with the capital still manages to hit growth targets and reach an acceptable liquidity event for the VC, then any in spent capital would only add to the valuation of the company.
Is that common, no, but it does happen; if it does, generally means founders gave up equity unnecessarily.
If a startup doesn’t need the capital to grow, they’re not likely to take on VC funds. If they do, the startup will need to sell equity, which based on funding round have norms based on equity given for capital received. If the startup is frugal with the capital still manages to hit growth targets and reach an acceptable liquidity event for the VC, then any in spent capital would only add to the valuation of the company.
Is that common, no, but it does happen; if it does, generally means founders gave up equity unnecessarily.