Do I Need Venture Capital?
I want to get your opinion on my product, and some strategic advice if possible. Reading the lean start-up and watching countless videos, entrepreneurs always say it is easier to raise money before launching and I wanted your thoughts on that.
I think raising money is a huge factor for whether I have a chance or not. What I’m trying to create here is huge and not a simple task, I certainly believe I need a team and it’s extremely difficult and challenging to go at this alone. There are companies I look at which have attempted to do something in the space and they received funding for a very poor product and strategy. Another company just raised another $60 million also had a seed investment prior to being on the market.
I’ll provide you with a download link tomorrow to test my product and hopefully give me some feedback as well.
— Painfully Green
Dear Painfully Green,
You are wrong. Raising money is not a huge factor in whether you have a chance or not. If you think that is the case, you already have no chance. If you don’t believe you can start building a business without raising money, then you don’t really believe in yourself.
Stop comparing yourself to others. Stop saying that other companies are so bad and it should be so easy to do something better. Those companies are in a very different part of building a business than you are.
You are at the start. Stop acting like you deserve funding because those companies got funding. You are comparing apples and oranges. Go prove to the world that you deserve funding because you can build something better that more people want and find value in.
Investors don’t say to themselves: “Well if only some smart dude came by my desk promising me he could build yet another clone of a successful startup, I would fund him tomorrow” That is a myth. Never happens. Ever.
They evaluate you. They evaluate your business model. You think you know your competitors business model, but you don’t. Have you seen their pitch deck? Do you know their real growth and revenue figures? Don’t pretend like you do if you haven’t. Stop obsessing over the fact that others have come before you.
Go read Richard Branson’s “Losing My Virginity”… Richard Branson didn’t raise money for years and he built one of the largest businesses and brands in the world. Go read Felix Dennis’s “The Narrow Road”, Felix founded Maxim magazine and didn’t raise money by selling equity. Felix owned 100% of Maxim magazine when he sold it for $240M.
Go build a business. Fundraising is not holding you back. You are holding you back. You shouldn’t raise money until you understand that. Go create value. Don’t take short cuts. If you believe in yourself, you don’t need to take short cuts. Do it right. Do it well. This is not supposed to be easy.
About the Author
Lucas Carlson is a hands-on consultant, author and entrepreneur. He helps founders discover opportunities for growth, both for their companies and for themselves. He was the CEO and founder of AppFog, a popular startup acquired in 2013 after signing up over 100,000 developers and raising nearly $10M in venture funding from top angels and VCs.