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I know this refrain has been repeated often, but I'll take the bait again: The tone of this article, like so many, continues to perpetuate the notion that Star
by nlh 14y ago
I know this refrain has been repeated often, but I'll take the bait again:
The tone of this article, like so many, continues to perpetuate the notion that Startup Success(TM) = Raising VC Money.
Lest we forget our past (1999-2001), it is in fact possible to build a _business_ -- that happens to be in the startup stage of life -- that actually generates revenue and, dare I say, profits. Both may be small at the outset, but perhaps enough to get the ball rolling. Maybe even enough to scale (slowly).
Then, if there's a real opportunity and you think some outside funds might help scale quicker/better, you could raise some money. If you really need it.
(And though many of these lessons will still hold true then, the process will be quite different and less of a 'game'. I assure the budding entrepreneurs out there that the old adage "Banks want to lend money to people who don't need it" holds true for VC as well.)
- Cherian 14y agoAuthor & Co-founder here. Sorry if this sounded that way. I didn’t in any way try to imply raising money = success. In fact raising capital pushes you to succeed faster, which in some ways is not the right strategy IMHO. You need your organic growth. That said, with Cucumbertown the relationship with our investors have grown to such a level that money has become least of the value they have added to our startup. You essentially have people on you side who can open doors for you with an email or phone call. These investors are mostly entrepreneurs of previous era who have incredible insights and connections that spell the difference between success and failures. Cucumbertown, 4 weeks into launch has 2-3 such examples already. Cucumbertown didn’t intend to raise funds. It happened to us serendipitously. In retrospect, that’s probably the best thing that happened to us yet from a business development perspective.
- nlh 14y agoNo apologies necessary - and your point is great :) Good investors definitely add to your network -- the definition of "smart money" (vs "dumb money") is that you're taking on a partner who's going to help you in more ways than just paying the bills. Thanks for writing up your experience Cherian and good luck with Cucumbertown. Looks like a cool site.
- jamesjyu 14y agoAgreed wholeheartedly: success != raising. However, some startups do require upfront capital in order to succeed in the long run. One example is to come out first in a land run, where there are multiple players with funding that are actively targeting the same market (with a huge upside). Another example are markets that are winner takes all. In these cases, it's optimal to obtain a warchest and grab as much market share as possible.
- malandrew 14y agoAs a startup founder, stories like this have a very real positive impact for startups. They are a huge signal that you have money, that you are looking to hire and that you have around 18 months of runway. Many job seekers see raising money as a sign of company that may be successful and that now has the money to hire people. If these stories didn't provide business value, then startup founders wouldn't share this information with the press in the hope of trying to get on the radar VCs who may be interested in investing in the next round and jobseekers.