When is the right time for the startups to target VC fund?

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When is the right time for the startups to target VC fund?

June 4, 2019 Business 0

Fundraising and exits are much more celebrated today than profitability and longevity.

As such, VC backed ventures have a better probability to grow faster than profit invested organic business growth. Poor businesses with solid stories may find initial backers, but would eventually struggle to raise subsequent rounds.

I feel, the companies that attain decent business penetration and profitability (WoW Momo, Oyo) do better with the fund.

VC or any other capital needs a certain degree of financial discipline, pin-point budget focussed at milestones. Once a company becomes profitable for about a year and does a bit of expansion by investing the money back into business, the company has better financial discipline over a company which is still looking for a market.

Hence, raising VC fund generally becomes a good idea only once a company has a certian degree of stability of the business, market, team, and execution. Also, consistent growth for a period of time is important.

For other businesses, customer’s money is always better than VC fund.

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