Is raising venture capital the benchmark of success?

Attracting investor funding is only the beginning of the start-up adventure, not the endgame.

“Those guys are successful, they’ve raised half a million from investors,” one start-up commentator recently told me about a business.

Is raising money the benchmark of business success? Surely getting investors on board is part of the journey, not the destination.

Having some investors coming on board means others share the founders’ belief their idea is a viable business and it’s a great ego boost for those working hard to bring the product to market.

That cash also exponentially improves the survival chances of the business – too many promising ventures fail because the founders haven’t enough capital.

However, investors aren’t buying into your business so you can knock off early and buy an island in the Caribbean, it may well be you’re going to be working harder than ever as you are now accountable to those who’ve taken a stake in your company.

For some businesses that can mean failure as the investors may have different objectives than the founders, and there are plenty of stories of VCs deposing the company’s original people when it appears things aren’t working out – Twitter’s Jack Dorsey and Apple’s Steve Jobs are two of the most famous examples of this.

While it’s an important milestone in the growth of a business, raising capital is not the end game. Only minds addled by the Silicon Valley kool-aid believe that.

In fact, if you’ve set up a business because you hated working for a boss, you might find your new investors are the toughest taskmasters you’ve ever worked for.
Getting venture capital is another stage of a company’s growth, but it isn’t the end game.

Paul Wallbank‘s latest book, eBu$iness, Seven Steps to Online Success, shows how business can get online quickly and cost effectively using web 2.0, cloud computing, social media and e-commerce tools.

 

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