The Bullshit Case for Raising Capital

While there's nothing wrong with raising capital, the default reasoning requires examination — let's challenge to some broken assumptions that matter. [View this email in your browser]( • [Forward to a Friend]( The Bullshit Case for Raising Capital TL;DR: "Everyone is telling me that the only way to build a real startup is to raise capital and scale. I see all of these incredibly funded startups and have to believe there must be some true fact that only I'm missing?" "Nearly every startup that goes IPO raises capital — doesn't that say it all?" — Every VC Whenever I get into a debate with a Founder or Investor over whether startups need to raise capital, the discussion inevitability leads to that "trump card" of finality. The thinking goes that if every single super-successful startup has raised capital (by IPO standards) then it's impossible to overlook that data — or disagree. While there's nothing wrong with raising capital (we run Fundable.com, a fundraising platform!) I think the default reasoning requires a bit more examination. This isn't so much a case for not raising capital — it's a challenge to some broken assumptions that matter. Today’s Advice Sponsored by [Zirtual]( "All the Best Companies Raise Capital" By definition, the companies that investors fund tend to be the most likely to succeed (hence the fundraising) and have the highest chance to succeed (hence the capital). But the challenge to that notion is that fundraising is the difference maker. That's like saying "Stanford graduates the best students." That's not true. Stanford accepts the best students, and therefore they graduate them. If the best students didn't go to Stanford, then Stanford could no longer graduate the best students. The same logic applies here. If the best companies didn't accept capital, then they wouldn't cease to be the best companies. Those Founders and their ideas wouldn't automatically become awful. The great Founders and startups are the catalyst, not the investors. "You Cannot Scale Without Capital" In order to grow 10x faster we need capital — no question. There are very few customer-funded scenarios where the product is just so incredibly good that extra dough starts falling into our lap. Raising capital fills the gap between the time it takes to grow and how long it takes (if ever) for that customer cash to replace our coffers. But wait — why do we need to scale again? If we own a business that gets to profitability and solves all of our personal problems does it matter if it's not 100x bigger in 5 years? Probably not, which is why most Founders are over the moon when their startups solve their own problems. Getting 100x bigger in 5 years isn't a Founder problem — it's an investor problem. Investors are the ones that are pushing the pedal to the metal on speed and scale not because it's in our best interest as Founders, but because it's in their best interest as investors. "It's Better to Bet Someone Else's Money" Not a single person on the planet would prefer to risk their own money, but that's not really what this argument is about. It's only better to bet someone else's money on an idea if we can't do it without them. Otherwise, if it's successful, we'd of course want to own as much (if not all) of the outcome ourselves. So what we're saying is that it's better to bet someone else's money if it fails. But here's the part that we don't calculate — how many Founders after having raised multiple rounds of investor money and failing are in a good spot? I know of zero. What no one talks about is during that time the Founders tend to bleed themselves dry, taking sub-market salaries (if any) and being dragged under for years. The amount of angst and pain they go through with "someone else's money" rarely comes as any consultation. What we need to understand and appreciate as Founders is that while raising capital may have some advantages, none of them are written in stone. It's how we play it that matters. [Read Article Again Here]( Stop Stressing. Start Delegating. Doing everything as a Founder isn’t a superpower. The average Founder is spending 18 hours a week on low-value administrative tasks. Sure, they need to get done, but they need to [get done by someone else](. Your business will not grow if you are spending a major chunk of your week on task work. When you are: - in your inbox, - managing your calendar, - taking meeting notes, - doing basic research - or any of 1,000 admin tasks It means you AREN’T: - Working on your product - Talking to new customers - Building your team - Pitching investors - or any of 1,000 other critical tasks. Stop letting the “necessary” get in the way of the “extraordinary.” Focus on what’s important, and [let Zirtual handle the rest with a Virtual Assistant](. In Case You Missed It [Will Investors Want to Run My Company?]( If I take on investors, will they push me aside and run the company? [Can I Have a Boss Again? (podcast)]( As a Founder, what happens when we're forced into going back to reporting to someone else now that we've tasted the freedom of Founderhood? [Funding is a One-Way Street]( Raising money isn't just about getting some cash in the bank, it's about committing to a very different path to building our startup. Love this topic? Hate it? Let's chat on social media! Wil Schroter Founder & CEO @ Startups.com [Share]( [Share]( [Tweet]( [Tweet]( [Forward]( [Forward]( Copyright © 2022 Startups.com, All rights reserved. You are receiving this email because you joined Startups.com. Our mailing address is: Startups.com 1201 Dublin RoadColumbus, OH 43215 [Add us to your address book]( Want to change how you receive these emails? You can [update your preferences]( or [unsubscribe from this list](.