Fundraising is costly, time consuming, and cumbersome. Adjectives that we would discuss but I should also mention – it is humiliating. Not humbling. Humiliating. I am a thick-skinned professional and I seldom take it personal.
Also, the people who run VC firms are always under immense pressure. The success rate is quite low in what they do i.e., venture capital investing. The only input they have is money. And money can only solve money problems.
It cannot solve the lack of problem market fit.
It cannot solve for trust issues that build after mis-selling.
It cannot build a team. It can certainly hire people but not build a team.
There is a long list of items that money cannot help with and the most important of it is, control costs.
So yes, if it comes, it comes. I cannot take my eye off the target. We are building a sustainable enterprise and I should direct all my focus and energy into this remarkable product, and here in lies this problem
The process of fundraising has costs associated with it.
Besides out of pocket expenses, your other commitments suffer.
Fees to lawyers, underwriters, accountants and compliance and reporting costs.
Time, effort, and creative energy is spent strategizing this particular aspect of your product strategy and as a result,
performance suffers,
growth lags,
customers get neglected
Risk of Information Loss
I am not much of a believer of NDAs and secrecy. Infact I am fundraising out in the open but during the course of fund raising, you do share
Manpower Dependency,
Management Capabilities & Shortcomings,
Ownership and Compensation
Marketing & Competitive Strategies.
It can be a bit jarring and rather uncomfortable.
Hence to minimize risk of information loss, raise money from reputable sources only.
Founders are not beggars, looking for alms. We present an opportunity to investors to make fortune by buying low and selling high.
Stay in the game for long and you will realize the true potential of your product. During one negotiation I was willing to let go at ‘X’ but the discussion did not pan out. After about two months of product development, I valued us at 2.4X.
A lot of you may not be able to keep building continuously like we are doing as of now. But if have managed to step into the market, stay. Try not to give up on your idea, especially if you see growth. Remember it is not the funds that will get there. Funded startups fail all the time.
It will come down to sound principles of running a software business. The fundamentals will get you there, does not matter your pedigree. At least that is how I feel.
……until next time.
Good Night, and Good Luck.