Four Things to Remember About Venture Capital

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As you begin (or return to) your fundraising journey, remember four things.

We hope to help you avoid mistakes that could cost you years of your life or truckloads of money. This guide will show you the ins and outs of raising venture capital, the benefits and dangers it presents, to help you make informed decisions from the very start. To that end, we’ve included the section Assessing Whether to Raise. Even if you’re dead set on raising venture capital for your business, we advise you to read through this section, which will prepare you for some of the pitfalls you might encounter along the way. We believe you’ll be best suited for success when you see venture capital in context with all the other tools available to you when you’re looking for the cash to build your company.

This guide will highlight all the decisions, large and small, that can make venture capital work for you. We present differing opinions and showcase controversy, because raising money is no one-size-fits-all formula, and there are a lot of opinions out there on what a good process looks like.

Founders often fall into the trap of reading a blog post by another founder or an investor and taking it as gospel, without analyzing how the advice can or should be implemented to meet the needs of their specific business. On top of this, advice on how to raise venture capital is easily misapplied and often rife with conflicts of interest. Investors may suggest founders take paths that largely benefit the investor’s interests. While this is inevitable and in many cases well-intentioned, it is always important to understand the incentives of people offering advice, and to remember that you have options.

Ultimately, you have to determine what path most aligns the interests of your business, your life, your team, and your investors. The company you’re building is yours, and this guide will give you the knowledge to evaluate the quality and pertinence of what you read and encounter throughout your fundraising journey, to make your own decisions. It’s up to you to determine what applies to your business, where you see potential for compromise, and what you might need to change.

The only good generic startup advice is that there is no good generic startup advice.Elad Gil, startup investor and entrepreneur*

The industry rightly lauded for fueling technological innovation is itself due for innovation. It is mysterious, confusing, and plagued by an investment imbalance that often favors the familiar.

Many investors, firms, and founders today are working to figure out how the industry can find and support ideas that have not been heard yet, from people who haven’t yet been heard out. They are experimenting with different funding models, deal sizes, and terms, and expanding what a venture-backed business with high returns can look like. It’s becoming more feasible to build companies—and venture firms—in smaller cities throughout the U.S., and a growing number of firms are choosing to focus on specific regions that have not received much investment attention in the past.

Any founder taking venture funding today is part of this evolution. By selecting an investor, you not only affect the fate of your own company; the firms and investors you choose to work with are the ones who will shape the industry’s future.

Given the amount of money at stake, a first-time founder may never have experienced anything like the stress or the excitement of raising venture capital. It’s a complicated journey that includes exchanging partial ownership in your company for a substantial amount of money. This exchange is only the beginning of a relationship you will have with your investors that could last ten years or more.

Our purpose for this guide is to give all founders the power to choose how they fund their companies. If you opt in to raising venture capital, this guide will help you do so in a way that optimizes success as your company defines it. Crucially, we hope you will understand venture funding as a means, and not an end,* on your way to building something that lasts.