I am the founder of CribSocial.com, a site that encourages social interaction through activities between people of similar interests. It has only been a month since the launch and I have a relatively small budget for the marketing. Currently I am seeing small linear growth with my marketing budget. My questions is how far one should take their company on their own before turning to venture capital for further growth. My intuition would be to get funding as soon as possible, but I have heard few stories suggesting to wait as long as possible before going to VCs. Primarily because VCs like to see a product developed and launched in real market before risking their money and secondly the sooner you take venture capital, larger the share of your company you'll end up giving. But at the same time I don't want to lose the opportunity of significant growth. I don't know how to find the right balance between saving the company's share and growing rapidly with venture capital. Are there any stats or rule of thumb which indicate at what stage of the company one should think about venture capital. I would appreciate to get some feed back from slashdot members who might have had experience with startups and venture capital
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A VC will want to see traction, which in your case would be exponential growth through new users. You will need a good business plan, with projections for user base and realistic revenue points, you will need to have a compelling plan for turning your (soon to have) traffic and users in to revenue, even if your own grand plan is for Facebook to buy you ;-) A general rule is to take it as far as you can without VC money, but that doesn't mean you can't talk to them, if your able to connect with experienced Investors you can get a lot of advice which (in the early days) can be more important than the money. If you have hit a point where your growth is being hindered by your lack of capital you need to have plan that will enable you to predict that $X will translate in to X users, and then you will need to beg borrow and steal from your friends and family, remember if you are not willing to put in your hard earned cash why would a VC? Any VC will want to see that you have put in a lot of time and money in to your venture before they will. All the Best! Floyd. |
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This definitely makes sense. Thanks for your good advice. |
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