I've gone back to this post by Chris Poole, the ex-CEO of the now ex-DrawQuest. It is a remarkably honest piece of writing on the collapse of his business.
I've been in his position but never in a VC-backed firm. For us it all went horribly wrong and very quickly. Our dot-com clients went bust and within a few months (in 2002) we closed the doors.
But it wasn't VC-backed so instead of swan-diving the pavement, we (or rather 'I' by this stage) just bounced along the bottom for a year or so.
VC's are great in that they add rigor to your business but they also need to make 10x (or whatever) on their investments. Bouncing along the bottom is not an option, so Chris's business, which sounds impressive got canned.
I was able to struggle by and then go again. A couple of years later a friend of mine referred in passing to the 'failure' of my business. I had honestly never thought of it that way.
My point is that VC isn't always the answer.
Few in business will know the pain of what it means to fail as a venture-backed CEO. Not only do you fail your employees, your customers, and yourself, but you also fail your investors—partners who helped you bring your idea to life. ... I’m definitely not itching to start another company any time soon—it will take time to decompress and reflect on the events of the past four years—but I hope that if I do some day decide to pursue a new dream, I’ll be in a much better position to. After all, I did just receive a highly selective, four-year education for a mere $3.6 million dollars! (I find humor helps as well.)