Does Venture Capital Put A Timeline On Your Startup And Limit Flexibility
It’s been said that once you take on funding, your investors become the customers. Tesla’s Elon Musk agitated Wall Street when he recently tweeted considerations to go private at $420 a share, saying it would be beneficial to remove short-term pressures. Musk explained:
“Being public also subjects us to the quarterly earnings cycle that puts enormous pressure on Tesla to make decisions that may be right for a given quarter, but not necessarily right for the long-term.” — Elon Musk
Growth or Profitability?
Raising venture capital (VC) and going public have been exceedingly glorified and VC appetite for unprofitable startups is intensifying. The proportion of companies reporting losses before going public in the US is at its highest since the year 2000. Shareholders value growth, valuations and exits — often preventing startups from focusing on their priorities: customers, revenue and profitability.
