Startup Marketing

Why You Should Tell VCs You Don’t Want Their Money

By September 16, 2017 One Comment
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Refusing a great VC investment may seem like advertently swiping left on the romance of your life. Many founders see investment offers as once in a lifetime opportunities they are to grasp now or never. What’s the problem, you ask? The problem is — by doing so, they make an investment a prerequisite for developing their business and accomplishing their mission.

As an entrepreneur, you’ll face appealing choices and hard decisions every single day. To assure the success, you must learn how to cope with them from the very beginning. You become an entrepreneur because you desire to embark on a mission to solve a specific problem. If you’re in business for glam and comfort — you may as well head south and try out the show-biz instead.

So many young startups fail because they make fundraising a priority over solving the problem they started with in the first place. They chase investments instead of solutions. And once they get the investment, instead of focusing on building the product, they focus on building a modern working environment that will boost their team’s inspiration and performance and all that jazz. Right. By the time they need to raise the next round, they find themselves stuck in this amazing office with a not-so-amazing product that will hardly inspire the investors to keep pouring the money in. Consider this a step-by-step guide to failing before you even begin building.

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The important lesson here is to see money as a tool that will help you perfect your product, rather than seeing it as a prerequisite to start. Focus on solving the problem with funds that are already available, not on raising the funds while delaying what your business truly depends on — product development.

Raising money in the Silicon Valley is not an easy quest: when you’re chasing it, investors don’t drop the guard, questioning and doubting every aspect of your business model. When you want the money — you don’t get it. But when a VC offers the money, and you refuse it — plot twist! — they see your product more compelling, and often raise offers because they fear they will miss out.

Refuse the money. Drop the fancy workspace and teambuilding activities — until you build the product your team and space will revolve around. Be an entrepreneur to the core — start building your story from the scratch, rather than high-jumping to a status you can’t maintain. Invest your funds primarily into product development and market research. Instead of building the office, build the functional, appealing product that people will want to own.

moneyasatoolOnce you have the product — you almost don’t even need the investors’ money. You’ve built a solid foundation for your business to excel. You’re as independent as you can get. Needless to say — investing in your business will become a privilege, and you will get to choose who you want in.

Other than the obvious advantage of steadily growing the business rather than experiencing rough ups and downs, this approach brings other joys along as well: by independently building your product, you will build your self-worth, grow into an industry thought leader, gain influence and respect, and therefore open the doors to many world-changing opportunities — just as the little Iranian boy did. And he started climbing from the very bottom.

Curious to hear The Tale of the Iranian Boy Who Built A World from Scratch? Follow my lead.

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