Giving Up Equity

It is an old rule, and a good one. You don’t give up equity in a company unless you have to. Why not? Think about it. If you have reasonable hopes to make big money in a venture, why give away shares in those future earnings? It means, perhaps, that you are giving away something for €10 now that will be worth €10,000 in a few years. When you put it that way, who would do that?

But people do that in order to attract seed money. And I think that they do it far to quickly. There is a sense that getting investor capital is almost the same as generating revenue. Wrong. Getting investor money means giving up control and sharing rewards. You do it if you have to do it, but you don’t do it just to generate some advance cash.

So what to do? Generate revenue as soon as you can. Test markets early to learn what can be done before getting locked into a “pitch” for investor money.