How to Fund Your Startup If It Isn’t a Rocketship

Investors put in cash in exchange for a cut of the payout when the company is acquired or goes public. Since venture investors get nothing until the exit, no surprise that’s their only goal. And since startups are valued by revenues and revenue growth rates, accepting venture investor money is a promise to focus exclusively on explosive revenue growth.

This venture model works well because your interests are aligned with theirs — the senior team gets paid mostly in equity. 

Reasons your business may not be a great fit for venture capital:

• This model doesn’t work if it’s unlikely to have a 25x acquisition within five years. 
• You don’t intend to sell the business as soon as possible.
• You don’t want to kill yourself for instant noodle wages for the next five years in the hopes of a huge payout later.
• You want to dedicate your efforts to solving a problem instead of focusing exclusively on increasing revenues as fast as possible.