Consumer Internet startups are all the rage these days. But while the opportunity is vast, so is the competition. Most consumer sectors are already overfunded, and the game tends to be “winner-take-most-or-all.” What if there were a different market for talented consumer Internet entrepreneurs to pursue? Say, a segment with less competition, the potential for multiple winners and customers who are willing to pay up front on six figure contracts.
Over the course of my career I have done the bootstrap venture, the venture with significant VC dollars and the capital efficient venture (sub $5 million). Through all of these experiences I’ve learned lessons about capital raising, and more specifically, the cost of doing a large VC round. I’m not about to claim that VC money is always a bad idea, but before you take your startup on a tour of Sandhill Road, here are five reasons NOT to accept the big paycheck.