My Queue

There are no Videos in your queue.

Click on the Add to next to any video to save to your queue.

There are no Articles in your queue.

Click on the Add to next to any article to save to your queue.

There are no Podcasts in your queue.

Click on the Add to next to any podcast episode to save to your queue.

You're not following any authors.

Click the Follow button on any author page to keep up with the latest content from your favorite authors.

Slow Ride

The more VC, the less control. Why not take it easy?
Magazine Contributor
2 min read

This story appears in the August 2000 issue of Entrepreneur. Subscribe »

Here's the scenario: You get a great idea for a Web site, get it up and running, then go looking for venture backing. Investors like it and decide to opt in. They plunk down a cool $20 million and you ride off into the sunset temporarily flush.

Sounds like a script any self-respecting dotcom would follow, right? Not if you're Cofix Inc., a Web site that matches small and midsized firms with technical-service providers and helps entrepreneurs keep track of their service needs via the Internet.

It would have been easy and not at all out of step with the rest of the Internet economy for Cofix to seek $20 million in the first round of venture financing. But it wouldn't have been very smart, says Cofix's 39-year-old CEO Max Seybold. "If you get $20 million, you try a lot of different approaches," he says. "You start with mass deployment before you know whether the concept is going to fly. We've stayed patient, and are going through test marketing to come up with a proof of concept before spending all those millions of dollars on deployment."

The decision of this young Los Gatos, California, firm to take only $2 million from venture capitalists didn't exactly endear them to financiers. In fact, some decided to pass on the deal.

But the defections didn't scare them because they were following a strategy that would yield a critical upside. Instead of giving up 30, 40 or even 50 percent of company ownership because the idea is not tested, Seybold says their method means they may ultimately "avoid giving away an extra 10 percent of ownership to investors."

More from Entrepreneur

Kathleen, Founder and CEO of Grayce & Co, a media and marketing consultancy, can help you develop a brand strategy, build marketing campaigns and learn how to balance work and life.
Book Your Session

In as little as seven months, the Entrepreneur Authors program will turn your ideas and expertise into a professionally presented book.
Apply Now

Are you paying too much for business insurance? Do you have critical gaps in your coverage? Trust Entrepreneur to help you find out.
Get Your Quote Now

Latest on Entrepreneur