Food For Thought This Weekend: "Raising Capital Is Not The Same As Succeeding"

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Daily Crunch: Dome Edition

Seth Godin often writes short blog posts that makes (or rather, should make) one reflect for a not-so-short time. How’s that for kicking in an open door? At the risk of stealing the man’s thunder, let me copy-paste an excerpt from a blog post Godin published this morning, which resonated with me and I think will resonate with a lot of TechCrunch readers:

The goal isn’t to get money from a VC, just as the goal isn’t to get into Harvard.

Those are stepping stones, filters that some successful people have made their way through.

I don’t care so much how much money you raised, or who you raised it from. I care a lot about who your customers are and why (or if) they’re happy.

It’s a premise that’s rather easy to agree with. Of course raising capital doesn’t equal success.

Of course making (and keeping) customers happy is more crucial for any business.

VC funding is just one or more professional investors betting on people, an idea, a business model they believe in, knowing full well that only a small fraction of their portfolio companies will provide them with decent returns in the foreseeable future.

At the same time, we often congratulate entrepreneurs who contact us with information about their latest financing round, or with the recognizable name of his or her latest backer.

Perhaps it’s just become a habit, but then why did it become one?

Not every startup looking for financing gets funded, and some even die trying. Still, we are not easily impressed when startups do convince investors to back them, because we realize it doesn’t usually make a lot difference for the company’s chances of survival anyway.

At TechCrunch, we champion innovation. We love to try new stuff, and we certainly appreciate entrepreneurs who approach problems in ways others never thought of.

And yet, when we hear a startup got funding, we say: ‘congrats’ or ‘cool!’. I suspect that’s because we realize raising VC is not an easy thing to do for the large majority of entrepreneurs out there. No matter how you slice or dice it, raising capital consumes time, energy and resources that are often far better used for the startup’s business in question.

It can also be a stressful thing to do, so maybe us acknowledging that raising VC is not an easy feat, and congratulating entrepreneurs who do secure financing is another way for us to give them that extra nudge they might need to continue on their journey.

And yet, Godin’s words have made me wonder whether patting people on the back when they close their funding rounds is actually the right thing to do.

Maybe we should be encouraging them to genuinely try to change the world for good with the money they’ve just raised instead, and remind them that VC is indeed only one of many stepping stones they’ll need in order to make it to where they want to go. Discuss.

(Image via Flickr user Evan Prodromou, used with permission)