Five Extremely Powerful Reasons You Might Prefer A Joint Venture Partner Over A Venture Capitalist!
So when you finally decided to start your own business, “how” did you go about raising the money? Did you try and borrow from friends and family members? Or did you self fund it, or use all or most of your own money? Or did you initially try and get a bank to finance you? What pray tell entrepreneur, did you do? Did you turn to a venture capitalist (initially) or did you do it primarily with a joint venture partner?
Well, just depending on “how” or ‘what” your particular management style is, here are five potential reasons “why” you may prefer a joint venture partnership arrangement of some kind over a traditional venture capitalist!
Five Incredibly Powerful Reasons Why You May Ultimately Prefer A Joint Venture Arrangement Over A Venture Capitalist!
If you’re not actually trying to sell off a part of ( or at some point all of) your company, then these five incredibly powerful reasons, may be “why” you’d prefer some type of time tested joint venture partnership arrangement, over raising money via a venture capitalist. Granted in probably 99.99% of the cases, you & I may not even have the type of small /to midsize business model, that your typical venture capitalist (VC), would even be remotely interested in!
Because your typical VC isn’t even going to be remotely interested, unless you’re talking about raising a lot of start up capital and they (really) like your business/marketing plan and they think you (or they) can execute a truly viable exit strategy! Usually within the next three to seven years max!
But, that doesn’t mean that a trusted colleague, relative, friend or family member doesn’t have a proven business model, they might-at some point- be interested in funding! This post merely points out, five major considerations, to keep in mine! Plus, don’t forget, when a venture capitalist decides to invest in your business, they are in fact becoming some type of equity (owner) in your enterprise! Which means, they may have a little or a lot of say so in what actually takes place.
And the flip side is, when you and a joint venture partner work together, you’re primarily resource sharing, for the mutual benefit of all! Technically or legally they have no real say so in the direction or actual decisions that you and any other legal owners may decide to make. That’s not the case with a venture capitalist.
Which leads us to this list of five major considerations.
1.) Reason # one:If your company has a board of directors (that it’s) extremely satisfied with, and you’re not really looking for any outside input. Then you’re probably better off seriously looking into forming some type of joint venture arrangement(s). Because if a VC gets involved, (meaning) they’ve invested money in your business. Guess what? It’s very possible they will not only want, but demand they become an active member of your board of directors, as part of their deal.
2.) Reason # two: If you prefer to be able to make 100% of your own decisions about:
A.)“How” much money you can borrow (both now) and in the future.
B.) And “what” it will actually be spent on and to “what” degree! Then you probably want to avoid using a venture capitalist.
3.) Reason #three: If you want to stay in control of “who” you can hire! Then you’re better off forming a joint venture.
4.) Reason # four: If you prefer to decide ‘who” gets promoted and “how” much you pay them! Once again, you definitely want to avoid using a VC! Because as an active member of your board of directors, they would most definitely have a say in this entire process!
5.) Reason #five: If you prefer to retain 100% control over the future direction of your company and not have to get the approval of a newly installed VC board member. Then once again, you’re better off participating in some type of joint venture partner arrangement.
For sure, both options have their pro’s & cons! But ultimately, just depending on “how” you want to run your business, will help you decide on with options makes more sense. Approaching a VC or utilizing a joint venture partner arrangement. Any questions?
Please list at least two simple spin off concepts (in the comments section below) that you can apply to your business, product or service in the next 30 days or less!
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