Entrepreneurs should wait as long as possible to raise money, says a VC who's invested in over 20 companies
Courtesy of Patrick McGinnis
Not so fast, says Patrick McGinnis.
On an episode of Farnoosh Torabi's podcast "So Money," McGinnis, a venture capitalist who's invested in more than 20 companies over the past six years, says it's smarter to wait as long as you can before taking the outstretched dollars.
It's because, he explained, fundraising isn't about cash - it's about control.
He credits his friend Beth Ferreira, former COO of Etsy and current managing partner at WME Venture Partners, for pointing that out.
"It's so true," he said. He continued:
"The minute you raise money from somebody else, you now have new people in your company, they may have rights that they can use to affect how you run your business and you have a boss. That can be a very good thing because it can bring discipline to the company, it can bring new ideas and the capital can be invested into growth. But oftentimes, if you're not quite ready, if you don't have quite the right partner, it can create a lot of headaches for you as an entrepreneur."
McGinnis is the author of "The 10% Entrepreneur: Living Your Startup Dream Without Quitting Your Day Job," in which he explains that you don't have to quit your job to be an entrepreneur.
A 10% entrepreneur, he writes, invests just 10% of their time and resources into a new venture, while holding on to their full-time job. This way, he says, they have the best of both worlds, rather than throwing all their time and money into something uncertain. He's for entrepreneurship, but he doesn't recommend going all-in right off the bat.
He said on "So Money": "I will tell you with complete honesty, as much as I love many of my colleagues in the industry, that I encourage people to wait as long as they can to raise money."
Listen to the full episode of So Money »
- Colon cancer rates are rising in young people. If you have two symptoms you should get a colonoscopy, a GI oncologist says.
- I spent $2,000 for 7 nights in a 179-square-foot room on one of the world's largest cruise ships. Take a look inside my cabin.
- An Ambani disruption in OTT: At just ₹1 per day, you can now enjoy ad-free content on JioCinema
- In second consecutive week of decline, forex kitty drops $2.28 bn to $640.33 bn
- SBI Life Q4 profit rises 4% to ₹811 crore
- IMD predicts severe heatwave conditions over East, South Peninsular India for next five days
- COVID lockdown-related school disruptions will continue to worsen students’ exam results into the 2030s: study
- India legend Yuvraj Singh named ICC Men's T20 World Cup 2024 ambassador