Written on October 4th, 2005 at 09:10 am by Darren Rowse

Venture Capital and your Blogging Business

Pro Blogging News 12 comments

There’s a good post over at Whitespace titled Boom 2.0 which talks a little of the struggle of the 9rules guys to work out whether they wanted to accept venture capital funding.

“Last week we were offered a “generous” sum of money to fund some of the projects that we wished to work on. Initially, we jumped all over the offer for the simple reason that we continue to tell ourselves that if we could get away from doing client work for a couple of weeks/months then we could dedicate 100% of our time to the stuff we really want to do. After some time though and a lot of discussion we decided to turn down the money mainly because the offer didn’t feel right to us. I wish I could say it was an easy decision to make.”

Being approached by someone who wants to inject big dollars into your blogging business is a pretty amazing journey. I’ve had approaches from a number of VC people over the past 18 months and the feelings that come along with it are a real roller coaster ride.

You go from feeling totally exhilarated by the number of 000’s being mentioned - to totally freaked out by the size of it all - to a depressing realization of what the money will cost you (no one ever gives you money without some strings) - to feeling invincible as you consider the size of what you could build - to feeling that you could greedily build your own empire without having to give anyone else a share, to feeling convicted that money isn’t everything… etc etc etc

In each case that I’ve been through I’d given some serious thought to the idea but on each occasion I too, like the 9rules team, that things were not quite right.

On one occasion the VC guy needed an answer ‘now’ (here’s a hot tip - if someone insists on a ‘now’ decision, warning bells should be going off in your mind - why do they need a decision ‘now’? More often or not its because they know you can get a better deal elsewhere). On another occasion I would almost literally have been selling my soul for many years for the money. On another one I just didn’t feel right about the people behind the deal having looked over some of the other projects that they’d funded.

I’m not anti VC. I know some bloggers are totally against it on principle - but I see that there can be times and places where investment can be very appropriate. Having said this - I’m a pretty picky and choosey kind of guy and would only enter into this type of deal if everything lined up well. One of the dangers of going down the VC path can be that you put your blogging business on hold while you negotiate the deal and get bogged down in contracts and logistics. I know of a few small-business owners who have become quite obsessed with VC - to the point where the businesses that they were trying to get funded suffered.

My approach is to keep building what I’ve been working on as if VC will never be an option. If opportunities arise - each are evaluated on an individual basis. The deal needs to be ‘right’. If it’s not it is business as usual.

Of course I now have the luxury of being able to reject offers that are not ‘right’ because I’ve built things to a point where it provides a decent income - however as I look at the first VC deal I was offered - I’m so glad that I knocked it back as I’ve managed to build things well past what their best ‘now’ offer was.

I’m interested in others thoughts on the topic. I’m by no means a financial wiz - but what advice would you give someone looking at a VC deal?

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