I recently got a couple of VCs interested in investing in Commune.
Whenever this happens, I always ask why they want to invest and what they are asking in exchange. It's always the same. They want a huge part of the cake. Usually, they want more than half at this stage. And they offer some good money. It's good for me, but it's actually not much for them. I'm talking about tickets from 200k to 500k USD.
However, what many people never tell you is that VCs strictly want hockey stick growth. They don't want to help you build a sustainable business. They want exponential growth. If you won't make it happen, they'll close your company. Actually, it becomes their company because you sold it in exchange for some investment.
That's fair, and it's a good trade if that's exactly what you want. However, it's incredibly risky at this stage to take that money because I only have the promise that it may work. I still have to validate Commune actually works.
I've been there. I've seen a great startup fail because their investors forced the founders to change their strategy in the middle of the course. That change damaged the company completely. What could have been a really sustainable business for those founders and perhaps one or two more employees ended up closing for good.
I don't want that for Commune. I want Commune to be sustainable, so I won't take VC money this early. Sure, I'm not new to this, and I know that at some point I may have to accept it as the only way to go. But I'll only do that once the business is fully validated. At that stage, you are playing a completely different game. You don't have to give up 50 percent of the company.
Taking VC money can make a great impact on your company, but it can also ruin it quickly.
In both of my conversations with VCs in the last month, I honestly told them I don't want Commune to become a huge corporation. I also told them I don't want to be a millionaire. I just want to have enough money to have a great life — and I'm cheap!
If you ever want to shut down a conversation with a VC, these two sentences are pure gold 😄
I'll keep bootstrapping Commune and we'll see where it takes us. Perhaps I fail to make it work, it just stays small and sustainable, or maybe it becomes so big that I have to accept I can't do this as a bootstrapped business anymore.
So this is my question for you this week: when do you think it actually makes sense to trade control of your company for a pile of venture capital? Hit the button below and let's chat on Commune.
