If you read startup news, then you might believe “getting funded” is the ultimate goal of any business.
As an entrepreneur, though, you should look no further than Fab.com as a cautionary tale of venture capital. Once the most heavily funded startup in New York City, according to then-CEO Jason Goldberg, Fab blew through $200 million of its $336 million in VC cash without settling on a business model. It made risky bets in untested markets and tried to grow bigger than its customers were ready for.
Before a quiet acquisition by PCH Innovations for just $15 million, Fab had raised 11 rounds of VC funding at a $900 million valuation. If VC were the key to success, then Fab would have had it wrapped up. As Fab learned the hard way, one-time cash infusions can’t sustain a growing business. When you’re constantly chasing investors, it’s tough to focus on growing your brand and attracting new customers.
While VC can turn startups into corporate giants, it’s statistically unlikely that your company will receive VC cash. Assuming you’re one of the 99.95 percent of companies that don’t attract VC, here are some alternate funding options. Read the full article
