[timavr]

Founders always have skin in the game. It is called their time. Their lifetime is a very finite resource.

In reality, very few founders just raise straight away. 99% of founders spend a significant amount of time working on their business before they see the first dollar from the investor.

Operating business with capital constraints most of the time actually leads to way worse decisions. You start working with people who are less qualified because either they are volunteers or they are the only people you can afford. You start taking worse terms with customers because you need this money to survive the next few months or make the next payroll. You start taking credit card debt just to give you a few months in the hope of closing the client. You put your house as collateral to and pay social/mental costs if things don't work out.

So please please please if you have the opportunity to raise money on standard terms, just do it, unless you have rich uncle/family or wealthy yourself.

Also, people need to stop treating money in a startup financing transaction as a more honorable side of the deal. When you buy tomatoes in a store, you don't go to the store owner and be like "Yo, I gave you money, respect". Startup investors give money for shares in a business. One part of the deal is exactly as valuable as another.

[godzillabrennus]

Not all investors are created equal.

Taking their money might mean having to listen to them.

Nothing like fun and games introduced by a bad investor to make an already stressful situation more stressful.

Don’t build a business reliant on investment and you’ll be happier.

If you have to raise then don’t treat it as a good thing, you just sold part of your company and have more bosses now than just clients.

Standard terms hardly exist. Every deal is different.

Venture capital is a business model, Take the time to understand it before you start raising from VC’s.

There is nothing wrong with making a nice lifestyle salary from a small SaaS business without the pain of investors.

There is also nothing wrong with spending other people’s money gambling you can build a big company. Just don't let the terms prevent you from paying yourself if you go that route.

[burntoutfire]

> Taking their money might mean having to listen to them.

How is that structured legally? I doubt they get a majority's vote, so how else can they influence the decisions? Is not all investment money unlocked upfront?

[MattGaiser]

Sometimes they get an equal share. Other times they are just more credible than you and can rally the other shareholders. Other times they threaten other consequences simply through their influence. They don't need a legal mechanism to force your hand.

Never been an entrepreneur myself, but was an employee of a startup in an accelerator and have worked for two others.

[jimaek]

My contract had things like "investors majority" and supervisory board with lots of power where I only had 1 vote.

Those 2 things together could force me to do almost anything if they really wanted.

It's all in the details.

[barnabee]

Yeah, those details matter.

I could definitely get behind “Startups shouldn’t raise money on terms that destroy their autonomy and self determination”

[thathndude]

As with darn near everything, there’s a balance. I’m invested in companies taking a more VC approach, and another company that is incredibly cautious and skeptical of fundraising, growing slowly and cautiously.

This is an case by case kinda thing. And that’s why blanket advice “don’t raise money” is silly.

Also, it’s a software centric mentality. Good luck getting your hardware startup going without funding!

[drorco]

As a founder who has an experience with kind of both and raised after more than a year generating revenue, I'd say the things you mentioned as negative are actually often positive. Facing with these problems head-on will burst a founder's "happy-bubble" of their perceived reality, and often early entrepreneurs tend to be over-optimistic. Inexperienced founders who raised funds may easily over-estimate the value of their business, hire prematurely, hire too expensive people who will not be ROI positive. Being forced to work with limited capital can make a talented & ambitious entrepreneur become very creative and efficient with its capital. The opposite of course is the distortion we're seeing in the market with "Softbankish" type of businesses who use their capital to distort the market. The optimal course of action is probably somewhere in the middle but my main point is I'd argue the things you mention as negative are actually positive and will allow for a founder, gradual and healthy growth.