Smart Money Doesn’t Ensure Success

VCs are often called ‘smart money,’ because they are more selective about investments than the average angel investor or friends/family member. However, that doesn’t mean everything they touch turns to gold. A 2009 WSJ article listed companies that raised substantial sums of money only to fail in a fairly short period of time thereafter. Equally disturbing the brief article mentions that several had raised so many rounds of financing, the original owners lost control of the business. To me, the reminder is that business owners of promising companies should always do a “gut check” on the likelihood of success on […]

VCs want bail out money? Really?

The WSJ reported that VCs are lobbying the government to get access to SBA funds from which they are currently excluded. What the article didn’t mention was that this exclusion only applies to companies that are majority owned by VCs. That is they own more than 50% of the ownership. VCs advocate that young high growth companies create 80% of new jobs, which is true. However, companies that are controlled by VCs typically got that way because the company didn’t live up to initial expectations and VCs took more and more capital. Choosing between providing funds to those companies versus […]