Who Do You Trust?

When it comes to taking on potential investors, I’m going to leave the jokes aside. In my own personal opinion, this is the most serious decision you will have to make when creating a start up company.

Here’s how my mind works, combined with the knowledge I’m gaining studying Entrepreneurship at Western Carolina University. If you take on investors,  you need to make it worth their while to invest. If you don’t relinquish a certain percentage of your company (i.e. control), then investors will not be interested and your company will not grow. I say this because I believe if you are in a position to take on investors, then your profits alone will not help you grow to the scale you need to grow to in order to meet demand for your product or service.

The flip-side to this is if you relinquish too much of your company, it really isn’t your company anymore. You basically become an employee to a VC firm. And it really does boil down to whether or not you are money motivated or control motivated. For me, money is always a great motivator, but to create a legacy is a bigger motivator for me. Giving up majority share in my company will never be an option. I’d rather sell. But there is a way around this dilemma…

Take on multiple investors. If you want it to be more of a democracy (so that the best interest of the company is always the priority), then spread out the wealth. Get the money you need from multiple investors and the percentages you give for the investment can be lower. This makes it so that no single person has the majority say in decision making, allowing for rational discussion and planning.

In this case I could build my legacy, maintain a fair amount of ownership, relinquish control to more capable individuals, and ensure my company is always in the best position for growth.

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