Funding is Friction
David Rose occasionally shows up in my inbox by way of Columbia’s BVC mailing list. This week he hit a nerve:
The bottom line is that raising money from anyone, including both angels and VCs, is really, really tough. Since only the top 2% of companies looking for angel funding succeed in getting it, that means you have to be one of the top two deals out of a hundred who are looking for the same money…and many of the others have companies that are much further down the path than you are.
He’s looking at fund raising like it’s some sort of goal. Fund raising is a friction to your success. A necessary one, sometimes, but a friction nonetheless. Most technology startups can choose early on to spend time looking for seed money or build a prototype instead. Assuming you could achieve either, in one scenerio you’d end up with no business and some money, while in the other you’d have a tangible product and a hungry market vying to invest in its success.
The time and distraction of the fund raising process must be worth the benefits, right now, to your business. Outside investment is not an achievement or a prerequisite to success. It’s just one of several strategies that can help you out along the way.
