I think the crux of the issue is that if you set out to create a startup and you end up with a viable business that isn't really growing, it isn't really a good business in most cases.
There are people who intentionally start other kinds of businesses. These are often called lifestyle businesses. They tend to be structured differently than the kind of business that attracts VC money.
Since a Venture Capitalist typically does more than lend you money, it's a huge drain on their business for you to keep plugging along, calling on them for advice, etc and they can't divest because you aren't worth enough.
There's nothing wrong with starting a different kind of business. But if you set out to have something grow rapidly and you attracted talent based on the idea that this would be an exciting venture and you attracted investors based on that and you don't follow that path, it creates a lot of problems.
Think of like borrowing money to build a mansion, then building a little shack in the woods. You might be happy with the little shack in the woods, but the bank can't repossess your little shack and sell it for anything remotely resembling the amount they lent you.
So now you have some problems. You have legal and financial obligations you can't really meet.
I think the crux of the issue is that if you set out to create a startup and you end up with a viable business that isn't really growing, it isn't really a good business in most cases.
There are people who intentionally start other kinds of businesses. These are often called lifestyle businesses. They tend to be structured differently than the kind of business that attracts VC money.
Since a Venture Capitalist typically does more than lend you money, it's a huge drain on their business for you to keep plugging along, calling on them for advice, etc and they can't divest because you aren't worth enough.
There's nothing wrong with starting a different kind of business. But if you set out to have something grow rapidly and you attracted talent based on the idea that this would be an exciting venture and you attracted investors based on that and you don't follow that path, it creates a lot of problems.
Think of like borrowing money to build a mansion, then building a little shack in the woods. You might be happy with the little shack in the woods, but the bank can't repossess your little shack and sell it for anything remotely resembling the amount they lent you.
So now you have some problems. You have legal and financial obligations you can't really meet.