After I wrote the title of this blog, it felt almost contrary to everything that should hold true. In building a business Money/ Cash is king, in fact, a VC partner once said to me your number rule as a founder is to make sure you don’t die.
Crucially, to not die you need money. Money comes from two places, either you have it, you get it from others or you get it from your customers.
The ultimate compliment for me? raising external funding. I was probably depressed for most of 2015, because my company was still bootstrapped, not because the company was not doing great but because in my mind at the time I was not successful because of raising = success.
It’s easy to see how I somehow arrived at this belief, I would see x company raises xxx million dollars especially in Nigeria and overnight the startup and founders join an elite group of startup companies & founders who have raised external institutional funding, in the minds of many and myself they have already won the race.
What follows can now be summarised to a T, They start to appear at every tech conference going, newspapers fawn over them, their twitter credentials go way up, they get added to list x and Y, a tech crunch and tech cabal mention and if they are extra lucky some government official will mention them at exco and finally they get invited to all our NG lets talk about tech baby events ( you have to sing this part to get it) am sure at the parties they get an extra allotment of small chops.
Most importantly their money troubles are gone. Far away.
However, I think for all the noise that there on raising, there is not enough talk sharing off the flip side of the coin. What happens post raise? Is hyper growth demanded by most VC’s good for every company? Can you build a unicorn without raising?
I don’t have all the answers, however, the story of Nasty Gal, one of my favorite e-commerce fashion startups see here who recently went bankrupt after being a $23 million dollars Profitable company prior to VC raise brought it all the way home for me. In some cases, the more money you get from a VC the less chance you have a happy ending and this is now supported by research. The fact is that venture capital is not a direct route to a big payday at the end of your startup dreams. Whilst, its great for some companies, there is also life outside of that, especially in Nigeria there are great companies who have built something formidable without external funding.
In some cases, the more money you get from a VC the less chance you have a happy ending and this is now supported by research. The fact is that venture capital is not a direct route to a big payday at the end of your startup dreams. Whilst, its great for some companies, there is also life outside of that, especially in Nigeria there are great companies who have built something formidable without external funding.
In my opinion.
We place too much focus on VC funding as a metric of success when the only real metric is building a sustainable fast growing profitable business.
It all comes down to a simple fact that a small team moves quickly, builds a product that takes off, and makes a core group of people happy, scale it fast as you can and reap the biggest reward. The race does not end at raise or a non-raise. It is still very much there for the taking.