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    Beware Of The Hitchhikers: Why Startup Founders Should Choose Their Venture Capitalists Wisely

    A venture capitalist is like a hitchhiker, always on the lookout for the next big ride.

    Starting a new business is like embarking on a long and exciting road trip. As a founder, you are the driver. You are deciding if you like the road ahead, the pace and direction, and the rate at which you are accelerating the car.

    At times, you may end up picking up a few hitchhikers on your journey.

    John Mackey, the founder of the organic foods supermarkets Whole Foods Market said, “Venture capitalists are like hitchhikers with credit cards and as long as you take them to where they want to go they will help you pay for the gas; but if you don’t take them where they want to go, they will try to hijack the car and throw you out on the side of the road…”

    There are two things you should do with that fact. The first is to be upfront about the ground rules when you let a hitchhiker join in the ride. This means having paperwork in place so that everyone inside the car is aligned when it comes to the direction, pace and strategy, which would lead to the destination.

    And the second is to know what to do when you end up on a dead-end street or even a closed road. The ‘end game’ for every founder and investor is to exit and return their capital, whether it is selling your company to another larger competitor or going public.

    Occasionally, it is also about admitting it is time to step off the pedal and let someone else take over. Preferably before you end up getting hijacked and thrown out on the side of the road.

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    Izwan Zakaria runs Izwan & Partners, a corporate law firm helping startups and technology companies do business and raise capital in Malaysia and overseas. In 2020, Izwan was named as one of the ‘30 people to watch in the business of law’ by The Asia Law Portal.

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