Is Venture Capital Worth the Hassle? Experts Tell All

Entrepreneurs often get overly distracted by the quest for venture capital. These success stories will help you decide what’s right for your business.

By Marla Tabaka @MarlaTabaka

Marla Tabaka is a small-business adviser who helps entrepreneurs around the globe grow their businesses well into the millions. She has more than 25 years of experience in corporate and startup… Full bio

It’s no secret that securing venture capital (VC) is a challenging endeavor. Even so, the sheer volume of headlines announcing a VC-backed startup’s overnight success paints an unrealistic picture for entrepreneurs about the true level of difficulty in securing investor funding. According to the Small Business Administration, the number of startups funded by VCs in 2012 was an abysmal 300 of the approximately 600,000 new businesses started in the U.S., that means 99.95 percent of entrepreneurs did not gain access to VC for their new businesses that year.

But entrepreneurs don’t let a little thing like going against the odds get in the way of following their dreams. At the same time, not every entrepreneur’s vision of success depends on a financial backer.

I had the opportunity to gain insights from several industry experts and SME/startup executives about their own reasons for advising businesses to pursue VC despite all odds, or to bootstrap and forego external financial security in favor of greater autonomy. Here’s what they had to say on the subject:

Big-time bootstrappers

Seth Farbman, founder and CEO of eSignatureGuarantee, touts the benefits of forced frugality associated with a bootstrap model. “In the early days, our office structure consisted of a few small offices. When a large client approached us on a Friday and asked to come in-house to utilize our large conference facilities, we had a small construction crew come in for the entire weekend and knock down some walls to provide us with a presentable large conference facility to host our new clients. That hustle comes from a bootstrap mentality without access to a large expense account found with the VC route.”