The Venture Lifestyle Business

Written by Sean Murphy. Posted in 1 Idea Stage, Funding

“Some buildings need air conditioning because they have air conditioning. Because they were designed to be air conditioned, they have no natural ventilation and would be miserable to inhabit without air conditioning.”
John Cook in “Maybe You Only Need It Because You Have It

I wonder if the same thing happens to some fraction of venture backed startups.

If  the founders don’t start with a focus on revenue and organic growth but instead seek funding, I think it can sometimes create this ongoing focus on fund raising.  It’s nice if they can raise an initial round as this enables salaries and a number of other perks. But, like a man who has lost his balance and is running faster and faster to regain it, they continue to plan on new funding to maintain their “venture lifestyle business.”

I first noticed this a couple of years ago when we first offered our “Getting More Customers” workshop. We attracted a venture backed team that was running out of funds. Their whole focus was to document strategies in their updated business plan that would justify incremental investment. They were not interested in actually trying to get more customers, just to be able to demonstrate that they had a plan that they could execute if they were able to raise another round.

I am not against Angel or VC funded startups.  But I am disappointed when founders focus on writing a business plan–meaning one that’s a sales pitch for investors not an actual operating plan for their startup–instead of building a business that merits investment.

“Every time I read an About or Team page I think, ‘Why do they need so many people?’ Oh right, they have to. They took funding.”
Ed Weissman @edw519

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