Chapter 6Your First Outside Investors
“The tech world is crazy,” says Kyle Wong, CEO and co-founder of Pixlee TurnTo. “Think of it logically. It's wild that people would give 22-year-olds right out of college millions of dollars to test very unproven ideas.”
He has a point. That said, I wish it were true that everyone who has a great, scalable idea for a business, whether it's going to affect billions of people on the planet, such as Google, or be a more niche player, like SaaS billing automation platform Aria Systems, gets the money they need.
“There are a lot of very practical challenges that every fledgling company faces, and funding is only one of them, but funding is essential to all of it,” says Alec Wright. “You have to recruit and convince people to join your venture and get people who have the skills you need excited about your brand-new idea that's likely unfunded, and you're not able to pay them anywhere near what they're making in their current roles.”
The number of businesses that succeed and flourish indicates that many deserving companies do of course get funded. Statistics are quickly outdated, but if you're looking for current ones, check the quarterly report from the National Venture Capital Association (NCVA) and Pitchbook. Even with pullbacks in funding, which we were seeing in 2022 as I was writing this book, there is still plenty of money flowing into Silicon Valley, and there are VC firms and lenders with significant dry powder, although this could change ...