Venture capital can kill.
Yes, it can get you the fuel you need to launch your rocket ship. And, yes, you get to join forces with an investor of great power. But if you give minimal thought to the dangers ahead, you are toast. You can find yourself fired from your board, fired from your company or even blocked from selling it.
Ouch. Better steer away from this iceberg, right? You can make your venture deals significantly safer in three ways:
1. Learn the terminology and mechanics of venture capital
If you don’t know the basics, you remain entrenched at square one. But, you might wonder why you should spend time on it now when you have other priorities.
As Bob Dorf, founder of seven startups and co-author of The Startup Owner’s Manual with Silicon Valley thought leader Steve Blank, told me in a previous interview, “Life in a startup is much better if you spend all that early energy building something that will attract the interest of investors — rather than going and knocking on a hundred doors.”
Wise words. But when raising capital makes sense, you owe it to yourself — and everyone who helped you — to get it right.
To get solid wisdom on this, I jumped on a call with Brad Feld, cofounder and managing director of venture capital firm Foundry Group and cofounder of Techstars. He and Foundry Group cofounder Jason Mendelson literally wrote the book on venture capital, called Venture Deals, now in its third edition.
Feld shares a scary fact about negotiating a round of financing:
“After the deal is done, you don’t necessarily have any ability to…