October 18, 2007
It’s a phrase I hear often with Faraday. It’s a loaded question, particularly for a young start-up. There are so many implicit questions that follow…
How well funded are you? Have others put faith in your new-fangled-widget already? How can we ride your ideas to the bank? How can we get a cut of the action? Are you desperate enough to give us a good deal? Do you live close by? Do you have a great management team? Is your product defensible? Is your market huge? Is your company worth a huge exit? Are you planning to cash out at 10x our investment?
My answer has changed dramatically over the life of Faraday. It has gone from “Looking for money? What you mean on the street?” to “Are you kidding, we would love any money – how about $10, do you have $10?” and then to “Sure we are raising a round, we have [insert great elevator pitch here]”. It then shifted to “Really? Is that all you got?” and so on.
Since some of the most recent developments in the product/business strategy and the great adoption rate of APML has become clear the question “Are you looking for money” has been raised a few more times.
Most recently though, my answer has changed again. My answer now is “No, but we are looking for partners”.
As I have mentioned in other places, I have come to realize that money is not actually the scarcest resource. People are. Good, trustworthy, influential, dilligent, humble, friendly, altruistic, hungry, happy, skilled, like-minded people.
These people can be staff – and money makes that easy – or they can be friends, advisors, other start-ups and users. Partners in success. So while cash is in that equation somewhere, it sits alongside a broad array of other contributions that partners can bring. It is just a resource. If you and your investors can’t bring the other desirable attributes – like good people with a great attitude – then a real partnership is not possible.
Another issue to consider with funding from VCs is the whole process of pitching. I have learned that I hate pitching. Not because I am not good at it (although I am probably not great) but rather because I don’t think people can get to know each other in a 1 hour meeting. Especially not a meeting where one party is trying to act approachable and nice – as if they haven’t seen 100 other start-ups that day. The other party is trying to act smart and confident – as if they have a total understanding of their 5 year business plan.
It’s a farce.
I would rather get to know people and develop a deep undertanding for their approach, strengths and weaknesses. People who could potentially partner with, not just fund, our company. Some VCs work this way, they get to know you over the course of time and bring their own value to the conversation. Some don’t.