I Wish Someone Had Warned Me About These 4 Things Before I Took Venture Capital

“We finally got a term sheet!” the founder exclaimed before we’d even sat down with our drinks. I was at a coffee shop meeting with an impressive young entrepreneur I’d been advising for a few years, and he was clearly excited to share his big news. “It’s for $500k,” he continued enthusiastically. “Half of our million dollar round! Now things are really going to pick up with other investors.”

“They definitely?will,” I agreed. “I know you’ve been working on fundraising for a while. I’m proud of you. Congratulations.”

I really was proud of him. He’d set out to accomplish a goal, he’d been working hard on it, and he appeared to be on the precipice of finally reaching it. However, while I was proud of him, I felt bad for him, too.

Seems strange, huh? Why feel bad for an entrepreneur about to raise his first round of capital? Isn’t that an important milestone for a venture-backed startup? Isn’t that what’s going to help propel his company toward achieving his ultimate vision?

I used to think so. Back before I’d raised my first round of venture capital, I dreamt about how incredible it would feel to raise a million dollars. I was sure getting that first million dollars in funding would be the moment I’d finally have achieved startup success.

But I was wrong. After the moment had come and gone, do you know what raising a million dollars actually felt like?

It felt like work. Lots and lots of work.

To be clear, I also worked a lot before raising venture capital. Eighty-hour weeks were common. But there was one big difference. Before I had funding, I did lots of different jobs for my startup: I wrote code for our software; I ran sales calls; I handled customer support emails; I tweeted on the company's Twitter account; and on and on and on. I didn’t necessarily like all the things I had to do. For example, I?hated?dealing with taxes and business filings. Still, I was excited to get up every morning and start work because I enjoyed the challenges associated with getting my hands dirty in the day-to-day operations of the business itself.

In truth, the only thing I didn’t like about not having funding was constantly feeling under-resourced. That’s why my co-founder and I decided to raise venture capital. Not that it was easy. It took us a long time. But, eventually, we closed a million-plus-dollar round of financing.

I assumed raising that money would mean I had everything I needed to be successful. However, once I actually had the money, I wasn’t prepared for the ways it would change my relationship with my company and create all sorts of new obligations. Most of them I learned to deal with, but four big issues continued challenging me during my entire time running a venture-backed startup. I wish someone had warned me about them.

Warning #1: Investors want to be involved

Raising money from venture capitalists wasn’t like suddenly having lots of money in my checking account to spend however I wanted. I had promised to do some very specific things with that money, and my investors wanted to know those things were happening. As a result, after taking funding, a big part of my job revolved around updating investors.

In other words, raising venture capital meant I’d gone from having complete autonomy in my work to having to constantly report our progress to other people.

Those other people had plenty of opinions. Not that they were bad opinions. If anything, I wish I’d done a better job listening to my investors.?Still, I was constantly having conversations about things I used to be able to just do.?As an entrepreneur who was used to always “doing,” the change was strange and frustrating.

Yes, after my company raised capital, I was still the boss, but I was no longer in complete control of my day.?I quickly started to miss my former freedom.

Warning #2: Hiring creates problems

Since I’m on the topic of “being the boss,” it’s worth mentioning that hiring more employees wasn’t everything I’d dreamed of. Sure, the funding helped us expand our team, but having more employees meant I had more managerial obligations.?I’d gone from doing things myself to telling other people what I needed done.

Some entrepreneurs are great at transitioning from “doer” to “manager.” I wasn’t one of those people.?I tend to prefer the way I do things, so I feel the need to either micromanage or just do things myself. Neither of those tendencies are good in a manager. Unfortunately, I wasn’t able to learn those lessons about myself until I’d raised venture capital and could afford to hire a real team, at which point, I was stuck in a managerial role.

Raising capital could cause the same challenge for you. Are you prepared to manage? Are you comfortable giving up your hands-on role of building, creating, and doing in order to tell other people what they should be building, creating, and doing??If, like me, you don’t know, I suggest you find out before fundraising. It’s definitely not something you should learn about yourself after raising capital.

Warning #3: Profitability isn’t a priority

Before raising venture capital, if my companies didn’t generate more money than we spent each month, the difference came out of my own pocket. However, once I was a funded startup, that was no longer the case. Not only could I afford to spend money on things that wouldn’t immediately result in profits, it was expected.?My investors literally expected me to operate at a net loss each month. To them, it’s the fastest and best way to grow a company.

As a result, my overhead dramatically increased. I had to pay for a bigger office, I signed bigger vendor contracts, and, most importantly, I hired more employees.

Spending more money than I was making caused me enormous anxiety. Every month, I’d look at my bank account and see the balance dropping.?At the same time, the people I worked with — who were my colleagues and some of my best friends — had to keep getting paid. How long could I afford to do it? I knew the money would run out at some point, and that was stressful.

Warning #4: Your first round won’t be your last

Because, in their early years, venture-backed companies (usually) operate at a loss, and because founders need a way to keep paying the bills as they try to achieve meteoric growth, fundraising becomes a constant obligation.

This commitment to fundraising was the thing I was least prepared for. I didn’t enjoy the work that went into raising my first round of venture financing, but I assumed it was something I wouldn’t have to worry about again if I didn’t want to.?I thought I could take VC money one time in order to build a strong foundation for my company, and then I could grow the company organically from there.

That’s not true.

Once I’d accepted venture capital and committed myself to building a venture-style company, I was constantly having to raise more money.?By the end of my startup career, fundraising was my primary focus.?Every decision I made was a decision that had to be answered by asking the question: “Will this decision help or hurt my ability to raise more capital?”

It wasn’t fun, and it took most of my joy out of being an entrepreneur. When I left my company, I was spending less time than ever “working” for my startup — 40 hour work weeks had become much more common — but every minute I spent on my startup felt like work I didn’t want to be doing. That made the work much worse. I missed loving my job.

All those thoughts were going through my head as the entrepreneur I was meeting with continued excitedly telling me about his soon-to-be million dollar round of funding.?“Should I tell him raising venture capital isn’t the silver bullet he thinks it is?” I wondered. “Should I tell him the money is likely to create as many problems as it solves?”

I didn’t want to spoil his excitement. He’d been working hard and he deserved to be happy.?But I also wished someone had warned me about how raising venture capital would change my experience as the founder.

As I looked at the euphoria and excitement on his face,?I reminded myself that every entrepreneur is different. What if the things I hated about taking venture capital were the things he was going to love?

I decided not to warn him. Instead, and perhaps to make myself feel better, I wrote this article to warn you.

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Aaron Dinin teaches entrepreneurship at Duke University. A version of this article originally appeared on?Medium, where he frequently posts about startups, sales, and marketing. For more from Aaron, you can also follow him on?Twitter?or subscribe to?Web Masters,?his podcast exploring digital entrepreneurship.