Entrepreneurs: Fundraising—is More Better?
by Miki Saxon
How much money are you trying to raise?
Are you more focused on funding or on growing your business?
Do you read about huge valuations and the resulting funding and find yourself green with envy?
According to Ron Conway, founder of SV Angel, …it’s always good to bootstrap for as long as possible, meaning it’s better to not take money from a venture capitalist or angel investor; startups should strive to be self-sustaining at first.
When fundraising it’s important to know what you really need as opposed to what you can get.
Ego trips, too, play a role in fundraising. After all, think of the bragging rights and the media frenzy that come with large investments.
But raising funds means giving up equity as Xenios Thrasyvoulou, founder of PeoplePerHour.com and SuperTasker.com in London and New York, learned the hard way.
…venture capitalists expected his company to grow five times in 12 months. Though he viewed his firm as having a healthy, sustainable growth rate, it didn’t meet those expectations, and he was forced to hire an expensive and large management team. Eventually, Thrasyvoulou regained control of his company, but he reminds other entrepreneurs that “sanity is more important than vanity.”
Of primary importance for all founders is to remember that what goes up always comes down—especially the economy.
That means not just careful fundraising, but careful spending; it’s far smarter to bank the money than to spend it on plush startup living.
Read the article and learn from those who can say, been there/done that. It’s not the same as listening to them on-stage, but it’s a lot less expensive.
Flickr image credit: Howard Lake
