Outside capital always comes with strings attached. But raising money does not have to feel like doing a deal with the devil – particularly given recent developments both in the funding needs of young companies and the sources of money available.
There are plenty of horror stories to learn from. Take the experience of Charles Entrekin, a serial entrepreneur based in California whose technology services company took outside money to help expand into the software business. “When the big boys come to play, they come with an agenda,” he complains. “They want to get rid of you.”
Like many company founders, Mr Entrekin and his partners accepted an outside chief executive as a condition of taking venture capital money. Then, when heavy spending in pursuit of rapid growth left the company in need of more cash, they were forced to accept another round of capital-raising that diluted their interests.