4 Things You Don’t Know When Startups Raise Funds

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what you should know about startup funding

When we hear Startups or Tech Companies raise money, we are quick to calculate the money and not the work, sacrifices, costly trade-offs. 

Below are 4 things you should consider. 

1. Raising funds for startup takes some ungodly number of efforts, due-diligence by investors, out of pocket expenses by the startup team itself. 

The process of raising money can be somewhat stressful and expensive too.

Lawyer fee, Accountant fee e.t.c., all of these can be quite a lot of expense. 

2. Harsh Investor Agreements and high demands.

VCs don’t joke with control. The clauses in the Term sheets can take the decision-making aspect of the startup out of your hands.  

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We see people raise huge funds from VCs and we just see the money and do not understand the terms they signed or the control they gave up to get the VC Money. 

3.  It’s not your Money.

Even after you get the money, it’s still not your money.  The agreements you signed will ensure that you get the money only in tranches or sometimes upon deliverables. 

VCs breathing down on your neck for results, and that you submit quarterly company report, all these can be so demanding; beyond the glamour. 

4.  Growth is expensive

After raising money, you will realise that it is fast depleting with the number of persons you employ and pay

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