There comes a point where the hunt for funding, the very air that startups need, will suffocate and stall the startup.
A CEO has 2 main responsibilities in early stage scale up companies: They need to align the team on the direction and then find the funding needed to execute. So much branches from these: Selling the vision, finding product/market fit, attracting the first team — all prerequisites to raising any money at all.
The challenge for the CEO is to keep both of these responsibilities in view at all times. They can never put one above the other or leave one in the dust. This is by far the hardest thing to balance. The lure of raising seems to be the “easiest” path to success — money without earning it — but that is never the case.
The first thing to realize quickly is if the startup is ever going to be investment “worthy”. Not all companies deserve angel or VC funding. There is a specific mold and if the company doesn’t fit — even loosely — there is no amount of pitching, pushing or pleading that would land any funding.
The second actualization is knowing what it will take to close any kind of round. What metrics are investors looking for the company to achieve before a share is acquired. The ONLY way to find this out is to start talking to investors. This doesn’t mean pitch investors, this means start the conversation. Understand that good money comes from good investors and those good investors receive thousands of pitches, review hundreds and invest in a handful. Know what you are selling and to whom and then start the conversations well ahead of your need.
The last — and most important — realization is that the business has to be a business. Shocker. There is no way to gloss over a company that isn’t performing, hitting metrics, growing the right way.
If the CEO spends all their time on fundraising and no time on the business it will fail at both.
If the CEO spends all their time on building the business and no time on building relationships with investors, they will run out of air even if the company hits its targets.
Build a business while building relationships — a balancing act not for the weak.