Grappling with the formula for deciding whether to take investment or to stay bootstrapped. Assume you're ramen profitable. Any insight would be appreciated.
It would apply to any deal in which you trade equity for something, but VC deals are usually not straight swaps of cash for equity. E.g. they usually get liquidation preferences and the ability to veto small exits, both of which might decrease your expected value by truncating the curve of outcomes.
Thank you.
That particular decision seems to involve enough incomparable quantities that I'd focus on those rather than the actual valuation equation. Taking VC versus not taking VC puts you on different enough trajectories that it seems worth looking at your preferences there, first. For example, two extreme points: 1) the scale-up-fast, exit-within-a-few-years VC-backed shot; and 2) the "lifestyle business", growing to sustained revenues that are enough to make the founders a nice income indefinitely, with no intention of selling.