I do a lot of thinking about venture and angel capital.

As regular readers of this column know, I pretty much detest “cash for equity.” Maybe this has something to do with the fact that I consider equity sacred. Kind of like family.

So, giving equity away for mere cash isn’t, and to me anyway, too far away from handing your children over to complete strangers.

Don’t like it.

Regular readers also all know that I believe that recipients of venture/angel capital immediately become “softer” for just having received it. By “softer,” I mean that they very quickly become: less resourceful, less creative, and less willing to work as hard as their “un-venture capitalized” brethren.

After all, it only makes sense. Why bust your butt trying to sell someone your product or your service when you can just sell your sacred equity instead?

There are people who spend their entire lives starting up companies by trading equity for money. Some of these guys are really, really good at getting this dough. These guys can paint the rosiest pictures you can possibly imagine. Just give them their V/A money, and there will never again be a cloudy day. Cancer patients will heal and invalids will walk once again. Something like that.

These guys also know that, and once they’ve got the needle in your arm, that needle is easily replaced by a port. (For those who don’t know, a “port” is a hole in your skin that goes directly to a main vein. A port makes it a lot easier to inject fluid or extract blood the next time around. Hurts a hell of a lot less too.)

And once you get the port in, regular blood extractions can happen even while you’re sleeping.

After all, why would people not cough up a “second round” of investment dollars once they’ve already committed in the first round? It’s called, “protecting your investment.”

It’s also called, “throwing good money after bad.”

But the wily equity-for-money dude knows that the people who have already invested are deathly afraid of watching their investment go down the rat hole --- especially when they can prevent this from happening simply by “doubling down.”

But the title of this column is What If?, right?

And so here’s my “What If.”

What if the recipient of venture or angel (V/A) money really doesn’t want to build a product? Ever.

What if this individual is: a.) afraid to build a product or service, or, b.) unable to build that product or service (this is also known as incompetency), or, c.) a scammer … someone who, and for whatever reason or reasons, just wants to take your money. In truth, the concept of giving back anything to the investor was never even in this person’s mind.

If you think this doesn’t happen … well, if you think this doesn’t happen, I have a brand-new tunnel under the Allegheny River that might interest you.

Cuz it duz.

I personally think that the vast majority of people who take investment dollars start out with absolutely pure intentions. They have a great idea and they probably also have the ability, either by themselves or with people that they know and trust, to take that idea from concept to reality.

But, as they begin to encounter the same problems that every start-up business owner must deal with --- problems related to product development, personnel acquisition, intellectual property, sales, marketing, research, and customer support --- they begin to realize that by actually finishing that product or service, they are creating an organizational obligation with each and every sale.

Think about it. Up until the time that you have a customer, you have no need for "customer support".

Because, and up until the time that you have a customer, your product works flawlessly each and every time you use it. It never breaks in your lab. And even if it does break, so what? Everybody still gets to leave at 4:30.

Hell, until you have a customer, you don’t even have to send Christmas cards!

The simple fact of the matter is that the minute you sell Copy "A" of your product or service, your entire business "life" changes.

Customers do this to organizations. Customers change everything. To wit:

• Customers give the organization a sense of urgency.
• They give the organization a purpose. As the French would say, they create a “raison d'être.”
• And Customers find out things about your product of service that YEARS in "the test bed" could never find.

But what if the ownership of the organization doesn’t really want this change? This responsibility? I say this because I’ve actually seen companies grow quite comfortable in the placid environment that is (and you’ll love this one --- I just heard it for the first time the other day) --- a pre-money company.

(Don’t you just love that? Pre-money. Someone with a lot of courage came up with that one.)

Companies without customers. What a lovely place to vacation. The phone rings and you know that it’s simply just not a customer! A certified letter shows up? At worst, it’s from Publishers Clearinghouse. Instead of recoiling, everyone gathers ‘round to see who won! (I once had a company where I told my receptionist to go under the desk and turn out the lights when the Sheriff pulled up.)

So what could possibly be a problem in a venture or angel capitalized start-up?

Answer: There is no problem. For without a customer to make it, there simply cannot be any in-bound phone call to immediately force the company into frenetic action. There simply cannot be an e-mail from a customer’s attorney, advising you that you have “ten days to comply with the terms of your agreement before legal action is initiated.” Can’t happen.

And finally, in a company without customers, there cannot be products that don’t work. Happy days are here again.

You don’t think that someone could get addicted to this environment? What planet are you living on?

For those of you who think I write fiction here, let me just tell you that I have seen this exact company, or at least a composite of it, numerous times in my business career. These companies are devoid of heroes, goats, euphoria, and despair. The highs and lows that every entrepreneur (silently) craves.

What if?

What if indeed.