So a couple people asked me to share some stories about the VC blood suckers, err VC companies that I work with.
This is going to have to be broken up over a couple days.
So let me first give you an overview of what I call the “Giving Somebody Else Your Business” business model that is Venture Capital.
So the first and most important thing to realize is that Shark Tank is not VC. VC is a sick and disgusting business model that is designed to make the mega rich richer at the expense of small businesses.
So let me take you through the beginning stages of how all this works.
You have a business and you have received some initial funding or boot strapped together an idea and you are now getting ready to take your product to market. This is really your first true round of Venture Capital. At this point you need money to hire sales people, marketing staff, operations staff and additional developers to take your product to market.
So you begin to talk to a VC firm. They tell you how amazing you are, how you have such a great idea that is going to revolutionize the world, blah blah blah. At this point they offer you money on some totally made up valuation that the VC comes up with based on really smart people that understand market capitalization of your entire industry and your businesses potential in that industry (this is really important so read that sentence again because it is laying the ground work for them being blood suckers).
You have no idea what your business is worth and somebody is offering you millions of dollars and says you are now going to be CEO and blah, blah, blah by time they are done your dick is so chaffed from cumming so many times.
Now in your excitement you are about to miss the first time the VC company is about to fuck you in the ass. They are going to offer you essentially two choices. A bigger percentage of the company or a smaller percentage for more spots on the Board. It’s a false choice, both ways the VC ends up controlling your business that you founded because if they control the Board they can fire you at any time. If they control the stock, they will eventually control the Board and they can fire you at any time.
Now you gladly take the money because you have just been told how they are going to make you a billionaire. So you sign the paperwork and all of a sudden you find out you have to move to the San Francisco valley and work out of their business incubator. Which you come to find out is their CEO bootcamp to turn you into a successful CEO because most likely you come from a technical background of some sort and have no idea what is involved in running a multi-million dollar business.
Here is the second time where you will begin to learn that the VC will anally rape you. While at the Business Incubator you meet Joe, Bill, Fred and Tom. You ask them what they do in passing and you begin to find out that their businesses are actually pretty similar to your business. So you ask the head of the VC about this and he just assures you that they are yesterday’s news and you are who he believes is going to make both of you rich (never mind that he is already rich and you are just a poor pleb). You get all excited again and get back to working on your product.
Now you are nearing launch of your product to market and you are going to need a much more significant round of funding. You worry because the VC gave you a couple million initially but now you are going to need 20-100 million to get the market saturation you are looking for to get profitable. You have a meeting with the VC Leader and they tell you not to worry that they have friends at other VCs and they are for sure going to want to invest in you.
Welcome to the third time the VCs are going violate your asshole repeatedly. They introduce you to four or five of their VC friends and after a fancy meeting or dinner they all come together to support you and your idea and they are each going to take a fifth of your $100 million funding and help you get to market. So you excitedly sign the paperwork again giving up another percentage of your company by this point you probably realistically own somewhere in the 20-40% range. In all your haste of organizing the deal and trying to get your product to market you didn’t look up the additional four investors.
A few weeks later you take the time to look up the other VC companies and you realize something odd, they also invested in those guys you met earlier Joe, Bill, Fred and Tom’s businesses. You now begin to realize what has happened. You are just one of their investment pawns in an industry and whichever one of the five of you make it, is going to make them rich. See the VC’s just have to invest in everyone and whichever company wins, makes them rich and they just stop funding the losers.
Speaking of stopping funding, launch day comes, you leave stealth, announce your 100 million in funding and begin hiring like crazy for all those new sales that are coming in. At some point you call the head of the VC and thank him for all his help and his tone has already changed. He says something like, “we are going to need to see profitability in the next six to twelve months or we are going to have to look at some changes.” You want to push back and talk to him about all the upcoming changes and investment needed to get the project to the second phase but you know if you step out of line you are going to be fired from your own company. So you let him know that is understood and your team is hard at work.
Welcome to the beginning phases of a VC launch. Tune in tomorrow when I explain how in the world I fit into this crazy mess and what happens next on the road to being broke.
TL;DR - LoL VCs are the Devil!