Writing in Techcrunch, Collin Wallace, managing director at Techstars Oakland, powered by J.P. Morgan, challenged the conventional wisdom that venture capital is always a good thing for a young company. 

Wallace, who is also a lecturer at Stanford University’s Graduate School of Business, acknowledged that advising young companies to turn down funding is an odd message for a professional capital allocator to deliver. To make his case, he identified four classic problems that he believes venture capital can’t always fix.

1. Accelerating a business with negative unit economics. 

Wallace urges founders — before that embrace growth at any cost, to ask themselves this critical question: Are you raising capital so that you can lose money even faster? 

2. Raising money to patent “weak” IP. 

A patent is only as good as a company’s ability to enforce it, Wallace argues. Many patents don’t hold up under scrutiny and could result in a declaration that it shouldn’t have been granted in the first place. 

3. Seeking capital to fight large incumbents on their own turf. 

Using a David and Goliath analogy, Wallace writes that venture capital can be a founder’s slingshot, but will only lead to success when combined with cleverness and the right strategy. 

4. Raising money to avoid pain. 

A founder who is afraid to fail, to take the hits, is missing out on valuable information and lessons that will ultimately inform and shape their business. 

To read Wallace’s article, go to TechCrunch.