In this tight lending climate, entrepreneurs may be tempted by an investor's offer of cash, even if it comes with strings attached.
Vlad Shmunis, the founder of RingCentral, an Internet company that serves small business owners, has an answer to that offer: Think carefully before you accept it.
Mr. Shmunis said that when he was trying to raise money for his start-up company eight years ago, the venture capitalists he approached would not invest unless he changed his business model. Instead of serving small business owners, they wanted him to aim at private consumers.
His complaint is echoed by other entrepreneurs. They tell of putting years into finding a business strategy that works and how their success attracts a professional investor. Then, while negotiating the terms of his involvement, the investor asks for changes. He might want to move a company's headquarters or fire the chief financial officer. Or he might ask to replace one product line with another.
Financing, With Strings Attached
Posted by TimJustus under Raising CapitalFrom http://www.nytimes.com 5555 days ago
Made Hot by: on February 5, 2009 10:44 pm
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