TBC: Should You REALLY Be Raising From VCs?

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Hey there back channelers. I've got a question for you. Should you really be considering VC dollars. Our venture capitalists, actually, people you should be talking to. I asked this question because I really believe 90 plus percent of people that I talked to who are looking for advice on how to raise. Venture capital. Shouldn't be doing it. And there are two reasons that this occurs, and I want to make sure that you hear me articulate and describe those two incorrect reasons. And see if you fall into either of those camps. The first one is this. I thought that you want to be a VC back startup. That you've seen your friends from big fancy schools who lived in the bay area, who lived in big cities, go out and raise venture capital dollars.

Get a lot of. Excitement get a lot of attention, get [00:01:00] maybe some immediate exposure around the fact that they are a founder and CEO that raised millions of dollars. And are trying to change the world. It's a narrative that you want to go after. For some reason. For validation because the cool kids are doing it because expectations. These are all terrible reasons to go after VC dollars. I think it's such a cliche for someone to say, like, you don't know what it means to raise from venture capitalists. I don't know what it means. To run a VC back company until you're in it and how much pressure and how much effort it takes, how much time it takes, how all consuming it becomes. And if the only reasons that you're doing it are external. Because of what other people think of you because of. What you think is expected of you because of. Validation that you want from a bunch of other people. You're [00:02:00] kind of signing up for the deepest amount of pain without the attachment to the actual business that you need to be able to balance those two things out. The people that really want to do this. Have some kind of attachment and have some kind of drive to doing this that you probably just haven't experienced yet. And I don't say that in a condescending way.

I say that as a memory. Of me running a venture back company when I probably shouldn't have been doing it, I just didn't have the attachment to what I was working on the way I have seen. In years past, as a VC, working with some of the biggest companies in the world. And as I have seen. And my current company working alongside founders who have deep passion and deep connection to what they're doing. So think really deeply about why you're doing this.

It sounds so cheesy. I know this idea of like, why are you doing this? Why are you doing this? But if you really aren't like. As it's described. If you really aren't like, [00:03:00] I just want to do this and I would be doing this anyways. Then really consider if you have different alternatives to how you spend your time. And please don't roll your eyes of like, uh, like I'm sure they say that, but most people don't want to do this.

They're just trying to make money. Um, uh, people that are really in this have some attachment to it and it could be the deep fascination with making money. It really could. But there are far easier ways to make money. I guarantee you than running a venture back startup. Okay.

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The second path and the second category of founder that I see who are running to me, asking how you raised dollars from venture capitalists. Are people that need money to get to another stage or another phase of their business. And the only [00:05:00] option they've heard of.

And in terms of getting that capital is this idea of venture capital. And so these people could be running. Very good businesses, businesses that could be extremely profitable. But actually aren't good candidates for venture capital investment. Venture capitalists are looking to invest in companies who could themselves return a hundred, a thousand X on the money that they invest in. Okay. That means that these outcomes likely have to be in the billion dollar range and not every great business has that capacity. So think to yourself, what is the business potential for what I'm doing?

If you were one of these companies, that could be a great business. But likely wouldn't be a venture sized outcome. Deeply consider how you get to the next stages. Of your company and what specific amount of capital is a [00:06:00] gap for you in order to get to the next stage? It could be this idea that instead of trying to raise a million dollars, What could you do with a hundred thousand dollars, $200,000. And are there opportunities within your network to go hard at raising from angels to get that amount of capital? As opposed to the mounts that venture capitalists like to provide in order to make their hundred thousand X returns. So these are two. Categories of founders that come to me, mistakenly wanting to raise venture capital that I hope. Hear this podcast and realize they shouldn't be wasting their time.

Venture capital is not for everyone. And that's an okay thing. Okay. So hopefully this message hits home for some of you. I hope it's helpful for some of you. And I hope to see you on another episode of the bachelor. See ya.

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