Far too many companies fail before they launch. Although everyone hears of the “great idea that couldn’t get funding,” there is another set that seems to be growing: “startups that never get around to getting funding.” For every Marc Andreessen with several companies launched and several successes, there are a dozen people with reasonably good ideas who actively avoid funding or spend too much time perfecting their idea.
The first is the VCs are Evil camp. Their reasoning goes something like:
-VCs only want to make money
-VCs may want to replace the founders or parts of the management team
-I don’t want to give up equity or control
More than one wise man has said, “I would rather have 22% of a successful company than 80% of a small company without enough money to grow.”
Yes, you are correct. VCs want to make money. That’s their job. If they are looking to change parts of the management team, it is with an eye towards getting more out of their investment. If you don’t like this formula, shop around for money that likes you just fine, but know there are only a handful of widely successful companies with a CEO/founder. It takes an extra special person to launch, grow and ramp a company. Some founders are very good at the launch, or the grow and ramp because these tend to be the more creative and innovative times in a company’s life.
Egos and greed can cloud minds. I’m sure that isn’t how most of the VCs are Evil camp would describe it, but what else would you call an overwhelming desire to want the most power and biggest share of the pie, even if it is at the detriment of the company you claim to love?
The second factor that kills companies before they are launched is when the founders don’t need the money. During my nearly 20 years in Silicon Valley, I’ve had the opportunity to work with some incredibly smart people. Several of these have been successful over and over again.
I’ve also had the experience of working with people who may be equally as smart but haven’t had either the fire or the need to move quickly. I’ll call this category Comfortable with an Idea. Here is a quick quiz to see if you fall into this category:
1) After you’ve created a demo and conducted market research, what do you think is a reasonable amount of time to begin looking for funding?
2) How many times have you rethought or redesigned your core technology or offering?
3) Have you been “in the process of starting a company” for more than a year?
4) Have your co-founders or original core employees started talking about needing to look for jobs because they are unsure if the company will happen?
5) Are you currently working on more than one project or company?
Answer these questions for your own situation, then truthfully answer whether you are launching a business or a personal project.
If you are a consultant or potential employee of a new company, you may want to use this guide as an assessment of the new opportunity. There is a thrill with launching and growing a company that few people get to experience. The key is to make sure you are investing your time in an opportunity with true potential. In that case, potential starts with actually launching.
Fork In The Road 