fbpx
Connect with us

Entrepreneurship

Is It Time to Raise Venture Capital for Your Startup?

startup, community, startup life, venture capital, startup community

Your answer to when to raise venture capital for your startup might define the future of your company. Covid has brought massive disruption to the global economy in a new way. At least in my time, disruption has been driven by technology, not by sudden social changes that affect the entire globe. We need to rethink the role of building companies in such a volatile environment.

Remember, do not raise venture capital in the early part of your journey

If you asked me six months ago when to raise venture capital for startup, I would suggest 100 ways not to raise capital in the early part of your journey. Raising capital needs a different skill set than building your company. It is expensive and incredibly time-consuming to raise venture capital, especially if you don’t have the fundamentals to show.

First, ask yourself if you are building a startup or a small business. Creating a global software platform to disrupt the financial industry is different from opening a bar. If you don’t know the difference, ask yourself if starting can generate a 40x Investment Multiple, a Venture Capital Investor is looking for. A software company can do that; a bar is limited by the customers you can fit regardless of how amazing your cocktails might be.

Your focus needs to be on how to get a product ready and generate cash flow. Period! So, let’s say you can get 20,000 Dollars together from Family and Friends to develop your app. You can come to Silicon Valley for one month trying to raise venture capital for your startup, or you can come to Bali and live off that money for 18 months where you design test, and release your app.

Don’t raise money unless you have a product to show and started building some revenue and traction in the market. Obsess about these factors, create a problem-solving solution that people will want to buy. With enough time and effort, you will always find that Eskimo that will buy a fridge from you. But that does not mean that you are great at sales; it just means that you are hopelessly wasting your time.

Create value for your customers and improve their lives

Create Value for your customers and improve their lives in some meaningful way. All talk of raising money will distract you and bring everyone to the question of their cut? How much sweat equity will they get? What is the valuation of the company? To most of these questions, there is no answer. There is zero validation unless anyone is interested in your product to the point that they are willing to pay for it.

So how much is your Business worth? Not much! Plain and Simple. Your Business is worth nothing at this point and is the reason why the first money you raise can become the most expensive capital you can ever imagine.

If you happen to be successful, it will be almost impossible to get rid of that investor ever. Even if you choose your partner well, things change. People change, they become alcoholics or depressed, they might even die, and suddenly you are dealing with their kids. Some people become complete egomaniacs just because they are finally associated with success. They are only my personal experiences; I am sure that there are many more.

What is the best early-stage investor to raise venture capital?

So, what is the best early-stage investor? The one you don’t need. There are other ways to incentivize people who can help you share of future profits, options in future funding rounds, discounts, future payment. Hold on to your shares! Unless you co-founded Paypal, you would lose most of your equity in future investment rounds anyway.

After a decade, if they had worked with founders who killed themselves to build their companies, owning 2% of the shares by the time the company started to become successful.

One thing has changed over the last months that I have to rethink as well. Who is doing well in these days of Covid Response? Looking around in Bali, it is those Businesses with access to capital and those without the overhead. I decided two years ago to go low budget, move operations to Bali, cut staff from 160 to 4, get rid of all office spaces, and stop traveling and becoming a lean, mean zoom machine.

We can scale up and down super-fast, depending on the availability of capital. Otherwise, right now, you might lose your business simply because you temporarily cannot pay the rent to keep your staff. Most Companies do have an overhead; there are only a few things that you can adjust quickly.

Start reaching before start raising

Maybe the answer is to build traction and access to the capital early. Start reaching out months before you start raising. Put the idea into people’s minds and then let them judge you on your progress. Your track record is the best indication of how you will develop in the future. Invite people early to share the ride with you, so months later, you are not starting from scratch when you do have a first product, traction, and revenue.

Unless you live in jealousy driven societies like Germany, people will want to see you succeed because you solve problems. Otherwise, there is no reason for a Startup. 

Find out more about EX Venture

Find out on how to create a perfect pitch to raise venture capital

Julien Uhlig is a disruptive Tech Entrepreneur and successful fundraiser globally. He advised 4 deep tech cluster projects funded by the German Ministry of Economics in the UK, US, Malaysia, Singapore and Indonesia. As the host of EX Venture Night and Speaker Series he reaches thousands of the most influential industry executives in the fields of Energy Transition, Electric Transportation, AI and AG tech.

Advertisement

Join Disrupt Magazine

Become A Disrupt Contributor

Most Disruptive

Executive Voice2 months ago

Kerwin Rae Shares How He Has Helped Over 100,000 Entrepreneurs Succeed and Grow

Kerwin Rae is Australia’s leading business strategist and high performance specialist helping over 100,000 businesses, in 154 different industries, throughout 11...

Politics3 months ago

Brock Pierce Wants To Disrupt The Two Party System And Be Your Next President

We don’t usually cover politics much here at Disrupt, but when Crypto billionaire and friend of the show, Brock Pierce...

Business4 months ago

John Mcafee – Predictions For The Future

John McAfee is a world-famous tech CEO, computer scientist, civil disobedience activist, privacy advocate, and pioneer of the commercial anti-virus...

Finance6 months ago

Gaby Wall Street – Teaching Latinas to Thrive During The Crisis

It’s no secret we are facing one of the most challenging financial times of the last few decades as we...

Entrepreneurship6 months ago

Tony Delgado – The #1 Entrepreneurship Movement In Puerto Rico

Puerto Rican online market is in constant progress. With many entrepreneurs who are coming here to start a business, it...

Entrepreneurship8 months ago

Elena Cardone – The 10X Ladies Conference Is Declaring 2020 The Decade For Women

The next ten years are meant for women to continue growing their potential and succeeding in multiple areas, including business....

Marketing1 year ago

How Josh Elizetxe Built Snow Into a $40 Million Dollar Business

There is nothing quite like an entrepreneur’s determination when starting a business. That’s my original quote by the way (pun...

Entrepreneurship1 year ago

How Jason Capital Became A Self Made Millionaire By 24

Have you ever wanted to earn the respect of everyone who ever looked down on you at some point in...

Entrepreneurship1 year ago

Sam Bakhtiar On His Way To A Quarter Billion

Dr. Saman Bakhtiar, who prefers being referred as Sam, lives in an 8200 square foot $5.2 million house, Sam is...

Trending

Copyright © 2020 Disrupt Magazine

The Disrupt Magazine & Podcast tells the stories of the world top entrepreneurs, developers, creators, and digital marketers and help empower them to teach others the skills they used to grow their careers, chase their passions and create financial freedom for themselves, their families, and their lives, all while living out their true purpose. We recognize the fact that most young people are opting to skip college in exchange for entrepreneurship and real-life experience. This Podcast was designed to give them a taste of that.