How some venture capitalists try to rob you blind

Probably the best way to finance the purchase of a business is with investors.

Not banks.

Not family.

And definitely not loans from other non-bank organizations.

However, I recently heard something that made me think twice about exactly what type of investor financing is best.

You see, while it’s true that investor financing means you don’t have to pay any interest (after all, you’re investing money, not lending it), not all investors are made of the same stuff.

In this case, I learned of a dirty little trick that many of the more “unscrupulous” venture capital firms play on people. And that’s like “hooking” when you ask for money.

In other words, they will keep saying that you will get the money you need next month or next week or whenever.

But in reality, they have no intention of giving you anything until the last possible minute.

Because?

Because, as any con artist knows, when it comes to giving someone money, the longer they wait to give it to you… the more desperate you will be.

And the more desperate you are, the more they can ask for in return.

In the case of venture capital firms, you’ll typically get more shares (and therefore control of your company) for your money.

It’s a terrible thing for them to do. But many venture capital firms do, so you have to be careful if you use one.

But really, this shouldn’t be a problem for 99% of people who buy a business.

Because if you’re buying a smaller company, VCs generally won’t bother with you anyway (that’s where “angel investors” come in).

And if you’re buying a larger business (worth, say, $5, $10, $15 million or more), there are plenty of private investors, with more money than they can spend, who will give you the financing you need if you need it. they are doing makes sense to them.

Still, keep this article in mind when thinking about how to finance a business you want to buy, especially if you don’t want to use a bank or other creditor.