Myth: While it is imperative from a fund-raising perspective and can be considered as one of the ten important pillars of early-stage fundraising activities, there is some deep-diving and understanding required of it. Entrepreneurs who are overly concerned about control will need to find a path to success other than venture capital. A glance at the typical ownership percentages as understood previously shows that even after a single round of financing, the founders no longer have "control," while also the VCs would have special veto rights over key matters such as acquisitions, the next round of financing, et all.
The terms of venture capital financings are structured around alignment of incentives, and not control, which is unlike many other routes of corporate financing methodologies. VCs appreciate the fact that the founders must have a sufficient incentive and bandwidth to create value for the benefit of all. Hence, the terms of a typical venture capital financing provide that, after a return of capital invested, the investors do not profit unless and until the management does. Likewise, management does not profit unless and until the investors do. This circular dependency and co-habitation create a mutually beneficial and conducive corporate structure.
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