Benefits of Working with VCs

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Benefits of Working with VCs
Read time 1.9 minutes

A common question I’m asked is “What are the benefits of a VC beyond the money?”

Many VCs promise to help founders in many ways but always seem to fail to deliver. Today I want to talk about some of the ways that I’ve observed founders being assisted by having a VC working with them beyond just the cash they received.

1. Follow-on Funding - Many VCs are able to invest at numerous stages of a business. Founders who have VCs that have set clear metrics which, if met, will fund their next round are able to focus more on growing their business and less on raising outside capital. This can have massive benefits when you can focus on growth for 24-36 months instead of needing to focus on growth for 12 months before starting a 6-12 months fundraising process. (And continually repeating that process).

2. Credibility - Having a recognizable VC on your cap table makes it easier to raise from other investors (especially angel investors). Many smaller investors look to big-name VCs for guidance, and having them on your table can be a significant boost to your fundraising efforts.

3. B2B Connections - Especially when you sell to businesses, many VCs will have connections to major companies or have portfolio companies with connections to them. Being able to tap into these networks can significantly accelerate your growth.

4. Knowledge Transfer- VCs have seen dozens of companies before you and have observed what does/doesn’t work. Being able to have someone who knows your company's insight and sharing decades' worth of knowledge helps you avoid common pitfalls and mistakes.

5. Leverage - You’d be surprised at the amount of customers and partners that will be convinced to work with you because of a name on your capable. This is why so many YC companies advertise that they are a YC company even after raising a Series A/B/C or beyond. It provides instant credibility for consumers and partners.

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