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0/ I feel this dialog on whether or not to take VC money overly complicates the issue. If you're building or selling something and you need money along the way, it's simply one of many options.
1/ In my world (b2b infra) often a significant amount of R&D is needed to get to an MVP. And just as often, it requires millions of dollars of sales investment before a company is anywhere near break even.
2/ There are many places money can come from, existing employers (e.g. to work on OSS), school, grants, employees working for cheap, employees pitching in, equity and debt.
3/ Almost always, money comes from multiple sources. In my company, we drafted on work we did at school, were able to get $2m in government grants, only took minimum wage for years, and many of us put money into the company.
4/ In some companies, these bootstrap funding mechanisms are sufficient. Or the founders are wealthy enough to float a significant operation. If that's the case for you, and you can stay competitive (and retain talent). Awesome!
5/ But not all startups have that luxury. In my case, we spent about $50m to get to sales traction. Even if I wasn't super poor (I was) that's still a hell of a lot of cheddar. I knew building the product would take a lot of resources, so we raised early on.
6/ Selling equity is exchanging a portion of your company for capital and terms/governance. While there may be some misalignment on risk vs. liquidity (btw, my poor ass had the same misalignment with my rich co-founders), generally everyone wants to maximize the stock price.
7/ The other option is debt. Although debt impacts the balance sheet immediately with periodic payments, and often has covenants which can shut down a company if cash gets too low. Unlike equity, debt lenders care only about getting paid back.
8/ Debt is typically hard to get for very early companies. While it can be a useful instrument, I wouldn't recommend it until you have repeatable growth (although was living off of credit cards for awhile, so that's a manner of debt instrument :)
10/ Bottom line, equity is just another market-based financial instrument. It's nice to know it's there if you need it. But certainly no need to use it if you don't.
