The net takeaway of a recent seminar I attended was that if you are an angel investor in a company that doesn’t subsequently land a VC round, your chances of earning a return are mighty small. This was a very carefully examined topic with plenty of backup data and not just a recitation of community wisdom. What does that mean for your early decision making as a startup founder? Consider these points:

If your idea is not ambitious enough to be appealing to institutional investors at the proper time, consider finding another idea. You can get pretty far with angels alone, but holding on all the way to a sizable exit is another matter. I’ve heard many entrepreneurs say they don’t want the headaches of dealing with VC’s and that they are trying to “lean” their cash needs to avoid that experience. I have no quarrel with the lean startup concept, but, as my regular readers know, I rather like the challenge of fat startups that are aiming high. I’ve heard many moreentrepreneurs bemoan the fact that they didn’t go big earlier and establish themselves as market leaders. Keep in mind that it takes just as much effort and time to chase a tiny idea as to chase a large one. You only have a finite amount of time; you should spend it where your efforts will be well rewarded.

Given that you have a worthy idea, be honest in estimating the resources required and be bold in seeking adequate funding. I have seen countless expansive concepts pitched as having billion-dollar promise based on only $500K in seed funding. If you attempt that leap, you’ll cast immediate doubt on the assumptions in your plan and your ability to execute. The costs are just beginning when you have an MVP, some real customers and little more than an engineering team. Those costs will outrace revenue for some time to come if you are trying to maximize long-term winnings. Acknowledge that up front and convince investors that you have a staged pathway to surround the early money with plenty of growth money when the time is right.

Start your company with the proper structure for institutional funding, and pay attention to all the legal, accounting, HR and operational details from day one. The aggravation and cost of a major paper chase after the fact to clean up a sloppy start will not endear you to investor prospects and may well reduce your company valuation and the credibility you have as a founder. ADHD is currently being reported in the popular press as being advantageous for tech founders, but, if that describes you, get a co-founder to handle everything in a business-like and straightforward manner and to keep it that way. You can make legal mistakes early on that literally poison future fundraising efforts. If you are not a lawyer, get a startup-friendly firm to keep you out of such binds. Like the famous 1972 Fram oil filter commercial, you can choose to pay a little now or pay a lot later.

When you accept money from a VC, you are commencing a relationship where whoever is your designated partner or board sitter becomes a member of your fundraising team from that day forward. I’ve heard just in recent days several prominent VC’s say they hardly have time to look at new deals because all their days are consumed helping their existing portfolio companies raise follow-on rounds. Once you have taken that first VC money, your strategy and theirs are aligned – raise more money to scale, and do so at steadily increasing valuations. When that is accomplished, everybody gets to stay in the game. VC’s generally have realized that their best portfolio strategy is to focus on the winners and immediately quit wasting time with the ones that emerge as losers. When the partner on your case stops returning your calls, you are in trouble. Without the enthusiastic ongoing support of your current investors, particularly any that are strategic partners, new money is highly unlikely to jump in and replace them. You need to finish the dance with the ones that “brung” you.

Everyone in the startup food chain is placing bets. Angels may bet money and a little bit of time. VC’s ratchet up the time component that goes along with the money. You as the founder are betting all your time and all your credibility on an idea and on your chosen team of colleagues. You must count the cards as you go along and remain realistic about your odds. You will be dealt many surprises, both good and bad, and you’ll just have to contend with them. Despite your best efforts, not all your bets will look smart at the end of the day. You’ll have to make some painful decisions to lop off ideas or people that don’t work out, just like what your VC investor may cold-heartedly do to you if your venture doesn’t perform. Startups are not a world of certainty. Apple did not get to be the first company to reach a $Trillion valuation based on the original Apple III or the iPod. Think of all elements of the universe that had to align for the iPhone to exist, all the work built on the shoulders of giants, and the importance of the right types of leadership at the right times along the journey. Think of all the gambles that were taken and remember the ones that didn’t work, even as the ones that did were overwhelming successful. You journey will be a similar series of gambles, and hopefully you’ll achieve whatever is within reach in your area of interest. A mere $Billion dollar company is not a bad outcome for most.

Understanding the perspectives of your money sources is a critical skill for any founder. It’s not a zero sum game. Everybody should be able to profit equitably. Everyone is taking chances and constantly adapting to the hands that are dealt. Once you’ve returned good money to investors, you’ve entered a rather exclusive club that gives you many more chances to leverage the same sources, if being a serial entrepreneur is your calling. Investors will seek you out to work your executive magic and help them achieve their desired portfolio returns. You’ll be invited to serve on interesting boards where your active participation will make a big difference. And, whatever you chose to do next, your success story will be an inspiration for those who follow.