Reflections on Raising Money and Fetishes of Those Watching

by Jan 14, 2015Startup Finance & Legal

For those of us in startups, opening up Twitter means seeing at least 1 or 2 funding announcements every couple of hours. And the congratulations and retweets roll in, if you are any good, journalists and bloggers need a piece of you too. But the fanfare and congratulations fizzle out, and you are standing there with all that glitter and confetti on you, yet your customers don’t care. They have problems you promised you would solve yesterday. All those salespeople are clogging up your phone lines trying to get at least some of your raised money just does not help.

Yes, my company, Robin Powered, closed a round of funding several months ago. Here are my not so fun takeaways:

The Funding High
Look, raising money is absolute hell. Even if you have odds stacked for you, you will have to bust your behind, and it will kill a heck of a lot more time than you are willing to admit. Founders will get to experience massive highs and massive lows. Rejections and grinf**kery galore. Add to that often too dragged out due diligence and legal, and what you have is exhausted founders. Thing is, the work has only just begun. That initial spike in the attention you got will die off. Your investors want to get paid. Your employees are constantly being recruited by others (and if they are not, get your hiring standards up, way up). Customers want those new features. Pronto! Stat! Back to reality, back to work!

Name That Round Fetish
We have FFF (friends & family & “fools”), seed, seed extension, bridge, mezzanine, A, B, C, D… Can we please stop that madness? Things have changed drastically since my 1st bubble experienced in the late ’90s. A lot of things got better, but naming of the rounds and classifying the stage your company – that is some new goofy nonsense. You sold equity to these great investors. You took in $X to grow your company. Done. No more goofy names.

Valuation Voyeurs
I, for one, hope I never have to participate in that fetish, until maybe I get to see an IPO at some point. It is useful for us internally, because a bump in valuation is a good morale booster. BUT! And there is always a but. Valuation and other terms are so interconnected these days that you may get what you want with maybe a little extra, but you will pay in much longer due diligence, closing, etc.
Yes, once someone is willing to pay-in at $1B valuations, by all means, a worthy topic. Go ahead shout from the rooftops, since you earned it. Anything at a fraction of that – there are more important things.

Here is the bottom line: “I got the tuna, time to make the sushi”.

Getting VC investment is no different than a sushi chef (because you know, I love sushi) going to the fishmonger and getting some top-notch tuna. It is just the start and an extremely exhausting one. I just want to go to making that sushi, feeding our customers, taking care of our crew, and paying back our investor. Don’t congratulate us on the trip to the fishmonger, come try our sushi, become our regular customer, help us get big that way. Now THAT is what matters.

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