Confusion about fund raising

I had breakfast with a venture capital friend of mine - Andy Dale of Buerk Dale Victor LLC. We were talking about the confusion amongst many entrepreneurs about raising capital.  It's easy for entrepreneurs to perceive raising a big round of venture capital as success.  There's a feeling (and I've had it) of raising 5 or 10 million dollars and feeling like you've arrived. It's an easy trap to fall into and one that successful entrepreneurs fight -- remember -- success in business comes with profitability or at least with cash flow positive.

Comments

[Paul Brown]

Hopefully, the sharp crack of the bullwhip from the Board of Directors is enough to wake you from the daydream...

[Matthew Berk]

Well said, Andy. The funding dog-and-pony show can be a huge distraction in a small business. The best path is to keep tight control, avoid big distractions, and grow organically, trying to reach profitability as quickly as possible. Having someone place their faith--and their money--in your venture can make you feel great, but there's really nothing to compare to having the ability to pay your bills!

[Matthew Lewis]

I'm sure you are correct in some regards, but don't mistake the feeling of arriving with one of satisfaction at reaching the next stage. As a part owner in a boot-strapped start-up, getting funded was a gigantic weight off of us. Knowing that we would get paid regularly and that we could concentrate more on the business and less on keeping the business afloat; it was a change that to an outsider probably resembled someone who won the lottery. Because in a way, that's the way we felt.

[Maggy Young]

Too right. Often obtaining venture capital comes across as the main achievement for a start-up as opposed to a leg-up towards it.