Your Funding Partner Could Actually Kill Your Company — Here’s Why


Given the buzz about funding from VCs, angels, and other sources, it may be counterintuitive to say that your funding partner could actually kill your company.

BY FAISAL HOQUE | May 16, 2014

I know this painfully well from my own mistakes and failures. In the late ’90s, I founded EC Cubed, a B2B e-commerce software platform company. Like many other founders, the proverbial door hit me on the you-know-what at the hands of the VCs who invested $50 million to rapidly grow the company. While that was extremely difficult, what was even more painful was watching the company collapse soon after my departure, despite the capital infusion.

Vinod Khosla, the famed founder of Khosla Ventures, at a TechCrunch event said that 70%-80% of VCs add negative value. According to him, most VCs “haven’t done shit” to know what to tell startups going through difficult times.

For other types of investors, such as high net worth investors, family offices, and private equity, similar conclusions about their success could be drawn.

There are many reasons why ventures fail. However, logically thinking, the success rate of post-funded companies should be a lot higher.

Funding and investors in a company should help increase the value of the company, not reduce it. So the question is, where is the disconnect?

Read the full article @BusinessInsider.

Copy link
Powered by Social Snap