This story appears in the November 2025 issue of Entrepreneur. Subscribe »
Venture capital is a powerful tool to scale startups, but is it the right tool for your startup? According to major VC investor Kevin Carter, not necessarily. Throughout his career, Carter has invested in more than 1,000 early stage companies, dozens of which have gone on to billion-dollar valuations. He entered early into disruptive companies like Airbnb, Stripe, and Snap — and now his firm Night Capital backs high-potential founders in massive markets. Here, he shares how to decide whether venture capital can take your business to the next level, and if so, which investors are worth partnering with.
So what kind of business is right for venture capital?
In reality, venture capital is a very specialized tool for building a very specific type of business: one that scales rapidly and has the potential to grow to a massive size. For many, many businesses, VC is not the right path.
When should a founder begin considering VC?
Get as far as you can bootstrapping and getting a lot of validation to the point where it becomes obvious. If you should raise venture capital, you’ll know it. If you’re operating in a massive market, and you’re working on something that really starts to click, you’ll start to feel this pull from customers. They’ll be trying to give you a bunch of money, and you’ll realize there’s an opportunity to accelerate everything you’re doing by partnering with a capital partner. There’s so much transparency in the venture capital ecosystem today — if you have a business that’s starting to take off, investors will probably start reaching out to you.
Related: Venture Capitalists Are Pickier About What They Invest In — Here’s How That Actually Benefits Startups
What sort of questions should a founder ask investing partners to make sure it’s a good match?
Ask about the investor’s story, their background. What other companies have they worked with? Who are they working with now? Where does the capital for their fund come from? How do they work with their portfolio founders? What does the cadence of communication look like? In a good scenario, this will be a 10-plus-year relationship, so you want to get it right. You’re thinking of the money first, but also think about all the other components of that partnership.
So what does a good investor bring to the table, in addition to capital?
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