Ben Kaufman on “What Raising Money Means”

Written by Sean Murphy. Posted in Rules of Thumb, Silicon Valley

Don’t congratulate people for raising money. That was never the goal. The goal is building a successful and meaningful business. When people raise money, instead of congratulating them, wish them luck. Their work is just getting started.

Congratulating people for financing perpetuates a problem that has plagued the startup world. The problem is that that it’s easy to focus on the hype surrounding a company, and lose sight of the fundamentals.

This is why our industry is flooded with […] people whose only ambition in life is to raise money, and then sell their company. They have no real interest in building a meaningful and enduring business. If we let [the people] dominate, we all lose.

This is my favorite startup quote of all time (although I don’t know who said it): “Congratulating an entrepreneur for raising money is like congratulating a chef for buying the ingredients.”

Ben Kaufman in  “What Raising Money Means to Me

Four key points for bootstrappers (from 8 Tips for Evaluating Funding Alternatives)

  • Revenue, especially break even revenue, is never dilutive of your ownership.
  • Paying customers are real proof that there is demand for your product. Getting funded is proof that an investor thinks there will be demand for your product.
  • Your most important investors are your spouse, friends, and family who will provide you with emotional support on the entrepreneurial roller coaster.
  • Professional investors don’t want control of your business, they want a return on their investment.

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