http://biz taxbuz z .com/is-startup- funding- the-holy-grail-or-a-curse/ May 21, 2013

Is Startup Funding the Holy Grail or a Curse? | BizTaxBuzzby Trevor Crow

5thAprilIs Startup Funding the Holy Grail or aCurse?Posted by Trevor Crow

I speak to many startup entrepreneurs and almost all of them spend a lot of t ime strategizing thebest way to get a big round of f inancing from angels or VCs. Entrepreneurs need to understandthat raising money can be a double-edged sword. On one side, the outside investment can providemuch needed credibility, guidance, visibility and oh yeah …. capital. On the other side, the companyis giving up a chunk of ownership and control of the company.

Most outside investors who write you a big check will also take an act ive role in the company toprotect their investment. This can either be a benef it or a detriment to the founders of thecompany because the ef fect iveness of the relat ionship and the quality of guidance varies widelyamongst potent ial outside investors.

Bottom Line. I think entrepreneurs should init ially spend t ime raising revenue instead of funds, andonly seek addit ional outside capital when absolutely necessary. Then when it becomes necessaryto look for outside capital, entrepreneurs should t ry to f ind funding from an investor that also addscredibility and expert ise to the company.