I think I may have scared a few of you away from venture capital financing in this week’s CIBC Entrepreneurship 101 lecture. Certainly the questions at the end of class and the comments from people who spoke with me afterwards indicate that I had introduced a certain caution into what is normally a feeling of exuberance in the quest for VC dollars.

Unfortunately it is very difficult and time consuming to obtain VC funding and even if you do, the chances of success because of the funding is very small. Given the potential for a negative outcome, most companies would be much better off trying to find customers instead of VCs. Customers will give you cash much more readily than a VC will, will help you with product development and will be eternally grateful if you do a good job for them.

If you do have a superb opportunity, you get VC dollars, and everything goes well it will be the best experience of your life. But either way you’ll need to get customers and that should be a business’ first focus, not financing. If you remain scared I suppose that this is good thing as a realistic set of expectations never hurt anyone. Good luck and if you do get VC funding, please come back and tell me about it. I love war stories.

Downloads and Resources

Weren’t able to attend the class? Need some notes or want to look something up? Click below for all of the goodies from the lecture.

What VCs Want (and why they call it ‘Vulture Capital’)
View more presentations from Cathy Bogaart. (tags: finance financing)

What VCs Want (and why they call it ‘Vulture Capital’) from MaRS Discovery District on Vimeo.

Charles Plant

Charles Plant has been the CEO or CFO of several successful software companies. He’s also been a management consultant, an investment banker, an auditor and an advisor at MaRS. See more…