True as far as the average figures go but of course it all depends upon the valuation the VC and the entrepreneur agree upon. If you are seeking $5m for a 33% stake, that means you value the company at $15m right now. Since VCs only fund high prospect high growth companies (typically looking at returns of 10-50x in a 5-7 yr period), you must demonstrate that the company will be at least worth $150m in five years AND that the VC will be able to exit the deal in order to cash his $50m stake (typical exit is an acquisition or an IPO).

Good point about bootstrapping. Many entrepreneurs don’t realise that not all businesses are fit for venture capital. And that not being able to secure it because of market being small or for another reason, doesn’t in anyway mean the business has no chance of getting off the business plan.

Seth Godin and Guy Kawasaki has some very good ideas on bootstrapping and “Art of The Start” at ChangeThis.com.