Don’t be distracted by $$$

Cautionary advice for startups.

Recently I read about a European bootstrapped startup that rejected $250,000 seed funding.

The reason they rejected the offer was that in return for that measly sum of money, the founders had to give up all the intellectual property rights, slave away at ungodly hours (weird, right?), get micromanaged at every step along the way, and on top of that, spend the money however the incubator wanted (not how the founders saw fit).

They weren't even offered any type of mentoring, which I might say is the most valuable aspect of the deal.

Now, even a child knows that this is a very bad deal. It’s practically slavery.

Veteran negotiators might say that this is an extreme case of start high and negotiate your way down.

But even taken individually, each of these conditions are pretty one-sided.

Nobody should accept any one of these terms. Not. A. Single. One.

But we see startups accept these type of deals all the time. Most of them go down after a couple of years of barely surviving.

Not really surprised.

I’ve even been contacted by some desperate founders who didn't want to see their legacy die off before it's even had a chance to breathe. But I had to tell them that no amount of growth hacking can undo the damage that’s being actively caused by their own people.

When are founders going to realize that they don’t need the VCs and angel (succubus) investors?

The internet is full of stories of bootstrappers making it big time (or even not-big-but-decent-time). All of them have one thing in common.

They're happy AF, that they didn't sell out to greedy VCs and the likes of them.

So if you're in the process of building your startups (bootstrapped or funded) be careful when you have an ‘angel’ trying to give you money. Always read the fine print.

Remember, there are no free lunches in VC world. (Pretty sad but true nonetheless)

Till next time.

-Jay

PS: In my world, free lunches do exist. I've been a bootstrapper, and I’ve worked with them. I know how hard it is to develop a startup in a highly competitive market.

If you have any questions, just post a comment, and I’ll answer them to the best of my ability.