In particular, most venture deals include a so-called antidilution clause, meaning that the VCs don't want to dilute their investments. So if a company loses value, they have rights to a larger equity stake, to keep themselves whole. VCs also bring cultural shifts, which begin in the boardroom. A venture capitalist almost always gains some measure of influence, if not outright control of the company. What may once have been the personal vision of an entrepreneur suddenly becomes a collaborative project.
Entrepreneurs have varied reactions to such conditions.
CMG Information Services Inc. Within three months, the company brought on a seasoned manager who was a former executive at Fidelity Investments. It's our baby, but we're only 21. As his young design shop grew, he was approached by a number of venture funds. He resisted them all and instead chose to fund the now 600-employee company out of operating profits. That's not the only way to be an entrepreneur.