There is one group you cannot avoid within the tech startup community/scene/bubble (delete as appropriate): venture capitalists.

Everyone, it seems, has opinions about them. Talk to any startup founder and chances are, even if they haven't ever spoken to a VC before, they will have a view on what they do, what their role within the startup ecosystem is and what it should be.

There are about 25 UK-based venture capital firms © iStock/denphumi
There are about 25 UK-based venture capital firms © iStock/denphumi

Some of those that have dealt with VCs will wax lyrical about their investors. Others may be a bit more sanguine about the experience of engaging with VCs: being too demanding (for example over future direction of the company, or hiring and firing) or just not being the right fit are two common complaints.

You could argue that VCs get more attention than they should, given the vast majority of tech companies function without ever receiving VC investment.

VCs are behind the biggest names in tech: Uber, Facebook, Just Eat, Airbnb, Snapchat, and more recently in the UK, Funding Circle, Deliveroo and WorldRemit, to name but a few. This perhaps helps to explain their allure, and they do have a significant impact on the economy.

However the fact remains that most tech startups not only can't but in fact should not go down the route of courting VCs for investment. At best it can be a distraction and a waste of time, and at worst it can be a huge, company-threatening mistake.

Many startups do not understand how rare and odd it is to qualify for VC funding, according to Boris Golden who is himself a VC, a principal at Partech Ventures.

"Startups sometimes don't understand how odd it is to qualify for a VC. Only a very small percentage of companies are suitable. They need to match two main things: they need to have huge potential – say, to become a unicorn [a company worth over a billion dollars]. The second is they need to have the ambition to do that," he adds.

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Perhaps startups should think a lot earlier and harder before engaging with VCs – and most of them should avoid it. The good news is we are here to help.

Here are a few of the instances where you shouldn't go to a VC.

If you are not seeking rapid growth

VCs demand rapid growth so they can get a large and fast return on the cash they inject. If that doesn't sound like your startup, you should probably avoid seeking one out.

"I think if you go with a VC you have to have a very aggressive growth plan. If you are more the type of founder who wants a slower, steadier, solid, good business then it's probably not right to go to a VC. It is for a specific sort of business need," says Luis Hanemann, partner at

Omri Benayoun, partner at Partech Ventures, agrees: "By their nature VCs seek good returns: 15 to 20 percent. The British economy is growing at about two percent. So it's not for everyone.

"If you want steady growth, a VC will not be okay with that strategy. You have to have a strategy that complies with the VC strategy of having very large growth within a large market. It'll be an unhappy experience."

If you want to keep control over your startup

Nikki Albano founded (its 4,000 customers include Ocado and GoCompare) with her husband in 2011, but they have made a conscious decision not to seek VC funding.

"We talked to a few VCs in the early days. But we realised they just didn’t share our passion for the business and where we wanted to take it, so we decided VC money wasn’t the right path for us," she says.

"It’s an enormously time consuming exercise and we believe it’s time better spent improving our solution. We get offers to buy the business, but we don’t even consider them, we’ve only just begun," Albano adds.

It's a view that is not just held by startups. VC partner Omri Benayoun admits taking venture capital will result in losing control over your startup, at least to some extent.

"You may want to avoid VCs if you want to keep control. Having them join as investors means you get capital and advice, but does limit your freedom," he says.

If you are not established enough

Although VCs understandably try to invest in startups as early as possible, that doesn't mean you should approach one the second you register your company. You need to get a bit more time, experience and hard knocks under your belt first. At least that's what David J Brown, founder and CEO of tech firm Ve Interactive suggests.

"For any business which is not ready or doesn't have a regularised business - which is not already proven with many cycles behind it - a VC will often see some of those things as a failure, and start to impose different controls and measures, and very quickly the innovation and agility of a business can be crushed," he says. is normal to avoid VC funding

There is sometimes a mismatch between VC and founder expectations when they enter into discussions, and it is neither 'good' nor 'bad' to take VC funding, according to Golden at Partech Ventures.

"It would avoid a lot of friction between VCs and entrepreneurs if everyone was clearer when it is and is not appropriate to go to a VC. A lot of entrepreneurs are very disappointed dealing with VCs: they waste a lot of time and get no interest," he says.

The best way to explain this is to consider how the VC business model actually works. If the startup raises a small £1 million round from VCs early on, there is already an expectation that there will eventually be a £100 million exit, according to Golden.

"If you believe you can do that, go to a VC. But if you can't, don't as a good VC will not invest. It is just the maths," he explains.