@angeleyescj You can read about founders who have built deep tech companies through VC funding. You can read about founders of Pixxel in India, they were saying no to VCs because they had plans for how they should work, instead they took funding only from VCs who shared their vision.
I am fairly new in the startup phase, but I believe read a bunch of stuff and their are plenty of people who has built companies without ever thinking of an exit.
@angeleyescj Most of hardware companies usually require an extensive amount of funding, and in most cases founders are left with at max 20% of shares.
When you have an investor who owns is a majority shareholder has different perspective of what founders have. These are just asset under management and when they need to liquidate they will find someone who is expanding portfolio and expect a growth from your business. Those VCs will exit at that stage without your involvement.
IPO and selling off is one popular way, but even as you founder you might sometime consider selling secondary shares.
Just read a lot. You will get different perspectives about the space.
@angeleyescj Be careful about being too liberal on intermixing "VC" vs. "investor".
Venture capital is structured a specific way. They need to get to finality for companies in each fund (for better or worse) within a specific timeframe so they can deliver whatever returns to the LPs. A fund lifespan had traditionally been 8-10 years, but it's increasing these days. Providing dividends perpetually won't generally work, because it's not how the ecosystem/contracts/etc. are structured.
That said, there's other potential investors out there than VCs. Accredited investors, family offices, etc. can do "expected % return on capital per annum" type stuff - because they're generally not working under the VC model and subject to the same exit requirements, timeframes, whatever.
@miesedap Thanks so much! That’s very helpful because it helps me better understand a few different potential structures and who might be the ones to accept them.
For VCs, when you say the fund lifespan has typically been 8-10 years and now longer… are you saying that the expectation for selling or IPO is typically that far out? Maybe that’s not too bad… by then it may be inevitable that if one is successful and wants to grow, an IPO may be what’s needed to expand the business to the level needed.
@saharali Is that enough? Thoughts in my mind include…cash flow will need to be prioritized in the early stages, so would likely not want to pay shareholder distributions until it is reasonable to do so. However, when there is sufficient profit for shareholder distributions…is that enough for them to be satisfied? My assumption is that an annual distribution would be much smaller of a win for the VC compared to getting bought.. but maybe I’m not framing this correctly in my head.
I will certainly do research on how that can be structured (and if you have any suggestions on where to look for further research, I would be grateful!)
I think part of it is that most of what I am hearing and reading about is that VCs want to hit a goldmine from getting bought or an IPO. You don’t really hear about investing in a startup and then enjoying the steady profits as they come..
