02: INVESTORS Do not take money from a stranger.

This rule is in the same category as never taking candy from a stranger. Never build a business plan around the necessity to raise venture capital from outside investors. The first thing they do, even with a minority investment, is take contractual control of all key decisions. They will start first with an exclusive on all future financing (for multiple rounds of financing the first round valuation is unimportant, the first round is just the cost of buying an exclusive on future rounds when the bulk of the money comes in and the valuation becomes important). Think of a restaurateur accepting a modest investment from the local mob boss. Now you’ve got the picture. A Stanley Pratt study found that VC funded companies have an average of 3.3 CEOs. Which one are you?