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A VC hit me up the other day to invest. What next?

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Feb 5, 2018
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I need a decision making tree on when’s a good time (if ever) to scale business with the help of a VC or investor. I’m kind of against injecting external $$ at this phase (~3 years in), primarily so I don’t owe a lender long term. However, there is some legitimate opportunity at the present time. I need time to consider since we may be jaded by the excitement of opportunity vs. unnecessarily borrowing $$
 

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Scot

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Going to need a bit more info than this...

First, is a VC offering to lend you money, or are they investing? Because a typical investment from a VC is equity, not debt.

If you were cold contacted by investors, you hold the leverage, because you don't need them. It doesn't hurt to hear them out. See what they can offer you besides money.

Do they have a track record in your industry taking companies to Billion Dollar valuations? Have they taken companies public? Do they offer tools, resources or mentorship to accomplish that?

Find out what ballpark $ they're looking to invest.

We don't know anything about your company, revenue, trajectory, market.. so its hard to give you any help beyond that.
 

Putt

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Asking for a decision making tree is not the best way to approach investment. Any form of growth using borrowed money or external investors is usually complex and requires far more 'holistic' thought than a formula.
Only you know the 'ins and outs' of your business and what support it needs. As @Scot mentioned, you hold the leverage in this position. Based on the information you've given, I would hop onto a short non-committal discovery call. Hold your cards close to your chest and talk to this investor about a $ amount, debt/equity, their experience and what value above their cash they can bring to the company.
 

PizzaOnTheRoof

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The fact that investors are reaching out to ou cold means you’re doing something right.

Feel free to hear them out, but personally I’d advise against vulture capital.

Unless they can bring something to the table other than just money as a strategic partner.
 

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