Ben Kaufman on “What Raising Money Means”

By | 2014-08-16T01:27:59+00:00 September 8th, 2012|Rules of Thumb, Silicon Valley|4 Comments

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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