I’ve read a lot of stories of startups and how they grow and how they succeed and fail.
A lot of those stories centre around issues of nearly running out of cash or realising they needed to “pivot” or simply realising their idea they’d all committed to was rubbish in the first place.
One piece of advice I was given early on in my entrepreneurial journey was that money buys you time and does not guarantee success.
Making startups and companies a success is hard work. Investors will tell you that the money being invested is about removing distractions from the process of building a business. And it is. Pretty much completely.
Just because you’ve raised Seed, Series A/B/C does not guarantee success. In fact, I’d say that unless you are beginning to be a success (definition: actually making a business) around a Series A investment, then you are highly likely to fail at some point in the future (not guaranteed — there are always outliers who make it). A savvy investor can often spot a future failure but may still invest anyway if there are assets to strip later (which is why IP is often a good pull for an investor).
Worth looking at stats on raising money. It’s not as many as you think manage to raise, and the stats suggest that if you’re not raising early on from a VC or similar, then you probably won’t succeed (~1% raise under that scenario)
What percent of start ups raise a series A? - Quora
Approximately 800 US companies raised a Series A round last year. That's the easy part. The hard part is what…
Basically, the funds and VCs pick their winners and back them. They tend to pick them early and whether they pick well or badly, it doesn’t matter. Simply put, if you’re just going to a VC and don’t have time to grow, then you’re likely to fail. Go early, and you give yourself a chance.
The purpose of raise money is to give the business time to grow into something of value. The money is there to remove the distraction for the business of running out of cash. Basically, it let’s you eat and not worry.
The raise is never the end, it’s the beginning.
This is also why you invest in the people as well as the idea. Good people are investable.
Good ideas can come from anywhere too. Simple side projects can often lead somewhere exciting. Good people play with side projects. Good people spot opportunities. Good people try crazy things.
So before you think about raising money, know the game you’re playing before you get in the room with an investor.
Money = time
Money != success