The Startup Playbook, 2nd Edition

Chapter 22What Happens after You're Finished with Fundraising?

We'd all like to think that when a startup goes out to seek capital, they encounter a long line of people anxious to invest. This is a fantasy, of course. Many startups fail to get any traction in the investment community at all. Others fail to raise enough capital and end up on the fundraising treadmill, always spending their time raising money.

As an investor, I (Will) see this all the time and in some ways, prefer to see companies completely fail at raising any capital than not raising enough. Why? Because when a startup is continuously in fundraising mode, the founders' attention stays on capital formation instead of on hiring the best people, developing the product, and focusing on the market. It's hard enough for new companies when the founding team can spend all their time on developing a success. Doing it with one arm tied behind their back is almost impossible.

Even a bigger problem with the never-ending fundraising scenario is that the company never has enough capital to move fast. They can't hire enough people, invest in marketing programs, or utilize outside resources to help. Time is almost always a startup's biggest competitor. Not having enough capital makes time a mortal enemy.

Concrete Sensors, a construction tech company where I am a board member, has a product that revolutionizes the construction industry. But since that market has been slow to adopt new technologies, many investors stay away. ...