Comment by NoPicklez
2 years ago
It "should" but in many cases it doesn't
If you have a great idea for an app or a product and you've started developing it but you need to hire more people to bring that idea to fruition. Rather than spending years of your own time and money to maybe get the idea off the ground, if other people like the idea and want to help contribute via an investment, why not?
Surely your business major would have described the idea of seeking an investment or capital via a business plan. The challenge is that these VC vehicles push this idea of providing an investment tenfold and they have their hands across large industries and portfolios. To the point where they can both invest when you grow and when you fail.
> if other people like the idea and want to help contribute via an investment, why not?
Indeed! But VC investors are a very different animal than other investors (who may not even be investing cash -- in my past ventures, more than half of my investors were my vendors who invested in my company via their products and services instead of money).
If you're starting the sort of business that needs an enormous amount of startup capital, then VC is where you turn. If not, then you're far better off going with normal investors.
What VC wants to see is not the same as what other investors want to see, and finding the right expectation to match your business goals is a critical part of success.