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More on the “Do Internet startups need VC investment?” Discussion

At a recent tech-industry gathering in San Francisco, investors from top-tier firms Accel Partners and First Round Capital reminded a room full of entrepreneurs that there’s a lot more to the founder-VC relationship than money. Investors help company founders refine their vision, generate buzz and bring their products to market, and they should be seen as teammates, VCs said.

But this rosy picture was quickly debunked by serial entrepreneur Jonathan Abrams, founder of early social network Friendster Inc. and event-planning site Socializr Inc.

“Believing these conventional wisdoms cost me a lot of money in the past,” he said. “The real world is a lot less pretty than that utopian VC fantasy.”

Young companies, by and large, need venture capitalists as much as they ever did, Shoifot said. While it might be possible to launch on very little, it’s hard to shine without some big names behind you, he said.

First of all, the WSJ is a little behind on this topic. Not that it is closed but there was a good amount of conversation about a month ago (e.g., here was my post on the topic – Does Venture Funding Still Matter?). Then again, they have the luxury of being the WSJ and pieces like these probably are interesting to their less geeky audience.

At the very least, I got the sense the writer believes it’s not a one size fits all environment now, which is good. I’m of the perspective that taking funding is very much dependent on the entrepreneur’s goals and lifestyle choices. If you want to blow an idea out of the water, in many cases, you’ll probably need funding eventually…and you’ll likely be working 100 hours a week. If you are OK with maintaining a smaller operation and choosing a better work / life balance, you might not be the next big thing.

In either case, I think not pursuing funding until you have somewhat of a proven concept is a smart approach. I’d much rather be pursued than do the pursuing. Having a product with a satisfied customer base and money in the bank puts you in a much stronger position to negotiate.

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