Venture Capital -- Why Most VC Deals Fail #12


J

johnernstlux

12. Deliberately Under-financing

Another age-old trick of venture capitalists is deliberately providing
less money than is needed. Then the company grows, needs more cash
fast, and has to go back to the venture capitalist to beg for it. The
venture capitalist provides the money reluctantly on bad terms that
give the venture capitalist more equity and more control - but again
he or she provides less than is needed and again, the company has to
come back for another rape. After a few cycles of this, the venture
capitalist has almost everything and the entrepreneur almost nothing.

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