Venture Funded vs. "Lifestyle" Startups
I get pinged a couple of times per week by people about starting up a business. Almost always the question is "How do I get funded". My common answer is take money when you don't need it, because that is the only time when people will want to give it to you. And don't take money when you need it, because people won't want to give it to you then. Why I was a Fan of VC Funding Here is an example story. In 1994 Bluestone had created a tool that made it easy to develop applications for the web that were driven from a database. Today this is how all websites work, but it was the early days. We were funding the development ourselves out of cash flow, and investors approached us - Bessemer actually gave us a term sheet. The founder declined. Our competitors (Spider Technology, which became NetDynamics) got funding and we were forced to respond to match their higher levels of spending and go look for venture funds. Of course when we did, our final term sheet...