Pros And Cons Of Getting Financing From A Vc Fund How Some Venture Capitalists Try To Rob You Blind

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How Some Venture Capitalists Try To Rob You Blind

Perhaps the single best way to finance a business purchase is with investors.

Not the banks.

Not family.

And certainly not loans from other non-banking institutions.

However, I recently heard something that made me think twice about exactly what type of investor financing is best.

You see, while this is true investor financing meaning you don’t have to pay any interest (after all, they’re investing the money, not lending it), not all investors are made of the same stuff.

In this case, I learned about a dirty little trick that many “unscrupulous” venture capital firms play on people. And that means “stringing you along” when you ask for money.

In other words, they are telling you that they will get the money you need next month or next week or whenever.

But in reality, they have no intention of giving you anything until the last possible minute.

Why?

Because, as anyone knows, when it comes to giving money to someone, the longer they wait to give it to you… the more desperate you’ll be.

And the more desperate you are, the more they can demand from you in return.

In the case of venture capital firms, this will usually get more stock (and thus, control of your company) for their money.

It is a terrible thing for them. But many venture capital firms do this and so, you should be careful if you use one.

But really, this shouldn’t be a problem for 99% of people buying a business.

Because if you’re buying a small business, venture capitalists usually won’t bother you at all (that’s where “angel investors” come into play).

And if you’re buying a big business (value, $5, $10, $15 million or more) there are plenty of private investors – with more money than they can spend – who will give you the financing you need if you do what you want. . is meaningful to them.

Regardless, keep this article in mind when thinking about how to finance a business you want to buy, especially if you don’t want to use a bank or other lender.

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