Early To Raise, Early To Bed, Makes Your Start-Up Dazed Or Dead

Everyone is chasing VC money these days it seems.

The mistake I see repeatedly is that entrepreneurs, especially first time entrepreneurs, chasing money – especially VC money – far too early in business lifecycle.

Not all start-ups are going to fit a particular mould.

The point about pursuing VC money is fuelling your start-ups growth not just paying your bills. These are two very distinctive points.

It is in a start-ups interest to bootstrap for as long as possible. A start-up needs to prove their business model, build an MVP, and acquire early customers, before chasing a large capital investment from a VC fund.

Bootstrapping permits business growth by 5% or 10% or 20% per annum. VC funding permits business growth by 100% or 500% or 10,000% per annum, year after year.

It’s that mythical hockey stick we see in various projections and hope that will be us. It is a rare start-up that will hockey stick in the first few months.

There is a “long head” (as opposed to the long tail) of hard work, small amounts of angel investment, and yes, bootstrapping that takes place before you can hit that inflection on the graph.

Bootstrapping is hard. Really hard. I’ve bootstrapped all of my start-ups before raising investment, and I’ve helped bootstrap other start-ups before raising investment.

It is long hours for very little money and a constant pursuit of customers. But bootstrapping gives you a singular focus for your vision – get profitable fast.

The times when a start-up I have been involved with pursued VC money and failed is going after VC money right out of the gate.

Where is the sweet spot for pursuing VC money?

That’s difficult to call because each start-up is different.

Any generic advice offered can be thrown away because you have to be involved with the start-up quite heavily for “when it feels right” (which comes through experience) not just because you need money.