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More Money, More Problems: The Down Side of a Mega Valuation The bragging rights may be tempting, but achieving a jaw-dropping valuation for your company can cause problems down the line.

By Sam Hogg

Opinions expressed by Entrepreneur contributors are their own.

Entrepreneurs fight for that big first valuation just like job seekers fight for the biggest salary--figuring the more they get now, the bigger the payday will be down the road. It's inherent to the hustle. This fight over ownership and control pits entrepreneur against investor the minute talk of a company's valuation begins. The investor wants a bigger percentage of the company via a lower valuation; the entrepreneur wants the opposite. But why the hostility? The reality is that both parties could learn a bit from the smaller-piece-of-a-bigger-pie analogy. Here's why.

It's a tough way to start a wedding. Investment partnerships are pretty darn hard to break up. As such, starting your journey together after a big valuation fistfight is not wise. Investors are folks who are going to be at your side, formally and informally, for a long time. Entrepreneurs should realize that they're competing for their investors' attention and money, vying against both new opportunities and investments already in the VC's portfolio.

The last thing a founder wants is to push hard for a high valuation at the start, only to have the investors write the company off down the road because they don't have much to gain anymore.

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