Loans vs. Venture Capital
If you want to start a business, a small company. Chances are, you don’t have enough money to make you business stand tall.
This might be one of your “Excuses” to why you are not working on your business idea. But this my friend is not an excuse.
We have multiple options when we want to get money for our business, we will focus in this article on Loans And VC as means to start your business.
So which strategy is better? should you seek a VC or take a loan?
Let us be real here, in today’s time and age you either go big or go home.
So starting a successful business from your 905 job’s saving is mostly out of the question. But this shouldn’t be a major problem. Well, it is much better to fund your own business, but overall you still got plenty of options.
For my latest business idea that I am working on, I decided to go with a VC. I can probably Fund it all by myself, and I can easily take a loan if I want.
BUT, VC Has one major advantage against loans that leaves no place for the latter to be even considered an option for me.
and that advantage is:
When you have a very promising business idea, like the one in working on right now, getting money is not the biggest issue.
The biggest issue is, when you start a kick-ass company that starts eating the market like a Godzilla, you will surely awake some competitors, and those competitors will have one common goal.
to bring you down.
Since you are still a young company, you want have a solid ground to stand on, and when that happens, so it is much easier to bring you down.
Get this, when your start-up is a direct threat to other companies existence, don’t expect any fair play.
Don’t expect competitors to try to bring you down by providing better services than you do. No
They will use all their mean whether is it legal or not, and whether it is ethical or not.
You need a giant by your side to protect your company in such case, and here the VC Comes into play.
If you have a huge VC on your side, like say 3i, you can be sure that no one is going to miss with you, because if you are going down, then the VC will lose with you.
This is, by the way, an all time golden strategy for most corporation in the world, they surround themselves with other corporation holding common goals, and they in-turn protect each other.
If you took a loan, then no one would care what the hell happens to you, yet it is beneficial for the bank since it will get a bigger share.
Scoring a VC is a hard job, and it requires a lot of efforts, but it is totally worth it. While taking loans are much simpler and straight forward.
When you take a loan you won’t sacrifice shares to anyone, but when you seek a VC then you will.
VC will force some rules over your company and they will have a say in it, which sucks, a lot. My tip for you is to assess how much of a good idea your start-up is, the better the more the need for a VC.
Aim first for finding a VC, but even if you did not find any, that is no excuse for you to stop your plans. risk it with a loan is 100 times better than wondering what if for the rest of your life.
Go with a Venture Capital, if not, then with a loan, if not, then hustle to make it work.