October 29, 2014
In an article about how starting up screwed up his life, entrepreneur Ali Mese talked about the pressure – from his friends, no less – to raise money as a sign of startup success. But is raising funding all it’s cracked up to be?
“There’s a lot of irrational thinking on what VC fundraises are,” said Cheezburger CEO Ben Huh at a Tech Cocktail Sessions event in Chicago last month. “I think it’s important to celebrate those milestones, like ‘Hey, we just raised a whole bunch of money.’ But it’s like saying, ‘Hey, we just took out a huge mortgage.’ Nobody throws a party for that.”
In other words, you might think that funding gives you freedom, but it actually gives you the opposite: obligations.
“You have to grow the business, your revenues, your top-lines, your metrics, to justify the next round of valuation to make that VC happy, so it’s an obligation you have to fulfill,” said Huh, who has raised over $60 million himself. “Revenue is harvesting what you’ve already accomplished.”
Talia Mashiach, the CEO of Eved and our other speaker at the event, agreed – despite herself having raised $11 million. “Revenue is much more important. Take revenue any day over VC money. Anything possible to not take additional funds outside is the best thing you can do.”
That sounds like: hold out as long as you can, but at some point, you might have to make some concessions in order to stay alive.
For more from Huh and Mashiach – including what it’s like to work for Huh, Mashiach’s thoughts on work-life balance, and what makes a good startup employee – watch the full video:
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