A “strategic” investor good or bad for a startup?

11 reasons why you should never take funding from a “strategic” investor

Living the startup life is already very stressful but it gets even worse if the first money that you raise comes from a “strategic” investor. It happened to me and now I really understand what the word “oxymoron” means. Here is why:

1. You do it because they look like they are going to be your first client. What you ignore is that because now they know your cost structure they feel “entitled” to price your services or goods at their most convenient value, not what your startup deserves.
2. Most likely you close the deal with the CEO of the company or a VP, but quickly they will put you up for adoption within their team. Never again will you come in contact with them, they are too busy running the day to day operations of their business. You will expect them to have a team specialized in “tying” up the deal but most companies don’t. In the end no one will “adopt” you and you will end up as a lost soul in one of Dante’s infernos.
3. “We are going to help you be succesful” really means we have a new lab rat we need to learn from. They dont care if the lab rat dies gets a tumor or gets really sick, they just care about their own business. The rat in this case your startup is secondary, not because they are “evil” its just because their core-business is more valuable.