Through Tyler Cowen on MR today, I came across Ben Casanocha’s “Business Rues of Thumb wiki”. A “Bartlett’s” by bloggers for the entrepreneurial community, I jumped to the section on “Raising Money” (found here: http://rulesofthumb.pbworks.com/Raising+Money), as we ourselves are in the midst of closing our seed round.
And while I mostly agree with the wisdom of Casanocha, Chris Yeh and Paul Graham (maybe does actually mean “no” in the VC world), I couldn’t help but be disappointed by the general negativity of these well respected thought leaders.
To summarize some of the major themes: Raising money is terrible, VC’s are terrible (and are sub-human), and deep down you really are terrible too, VC’s just aren’t properly incentivized to say it to your face.
To these again, I mostly agree. But businesses need capital to grow and develop, and venture capital firms are in the business of distributing this capital. As are angel investors as well to a lesser extent, though they seem to be as omnipresent and accessible as real angels (at this point I expect that the miracle of the angel round brings the stigmata). And anyone who has read TechCrunch knows that horrible ideas are funded by these very same VC’s with millions of dollars every single day. So the problem is perhaps not raising money unto itself, or even that venture capital firms are the guys behind the checks. It’s that there is some magic to getting your name on the check.
So my challenge to Ben, Chris and Paul remains: Don’t tell me I’m not that horrible company getting funded, tell me how to BECOME that horrible company getting funded. Because I don’t buy that “not telling a VC your interested in VC money”, or “not telling them how much you are raising or who else you are talking with” is the secret to money in the bank.