Getting Funding is NOT a Strategy

Money is always a con­sequence, not the root cause. You work – you get paid. You sell – cus­to­mer pays. You roll the dice and get luc­ky – you get rich. You have a busi­ness (plan) that works – you get fun­ding.

But get­ting fun­ding is not the end goal, not even for a star­tup. The end goal is to be able to pay all that fun­ding back, and some more. To reach that you need to have a busi­ness that works. For get­ting the­re, you need the right stra­te­gy. The stra­te­gy should be all about your busi­ness: who is your cus­to­mer, what is your offe­ring, how you plan to win etc.

The jour­ney from whe­re you are today to whe­re you need to be one day is typical­ly so long that you may need to top up some fuel on the way. Fun­ding is your fuel, hel­ping you to get whe­re you need to go. But it’s just a means to an end, not the rea­son your star­tup exists and defi­ni­te­ly not your Nort­hern Star. It should not be the dri­ver for your thin­king and acti­vi­ties, do not let  “what do I need to do to get fun­ded” to mis­lead you.

When is the best time to do the exit?

When the buyer is wil­ling to buy you at rea­so­nable terms. The most cri­tical ele­ment of this is the moti­va­tion of the buyer, and that is out of your cont­rol. The “open to buy” win­dow is crea­ted when their stra­te­gy shows a need they need to address and do it your­self doesn’t real­ly cut it. That’s when they start loo­king, and you need to make sure you show in their radar screen when they do. And that is the part which you CAN cont­rol. Some­ti­mes this hap­pens ear­lier than you would have liked, some­ti­mes later. Timing is not in your hands. Accept it, and act accor­dingly.

Are you the only VC type investor who has such a strategy?

No, but this is still more of an “excep­tion” rat­her than “the norm”. Some inves­tors who have a simi­lar kind of basic phi­lo­sop­hy (model is more of a “sca­lable Angel” rat­her than “VC”)

https://www.kimaventures.com/ (the only Euro­pean on this list)
http://rightsidecapital.com/ (we owe a lot to the­se guys for set­ting up a role model we have taken full advan­ta­ge of. Big thanks to Kevin & al for the ins­pi­ra­tion and open­ly sha­ring their thin­king)
https://svangel.com/ (buil­ding on the heri­ta­ge of the ori­gi­nal Supe­rAn­gel Ron Conway, they have the lon­gest track record to demon­stra­te the stra­te­gy works)
https://500.co/ (the most vocal on this list. For them inves­ting is just one of the things they do)
The­re cer­tain­ly are more but most inves­tors with this stra­te­gy tend to pre­fer a low public pro­fi­le, they focus on their busi­ness rat­her than PR.