For many startup entrepreneurs, raising venture capital is an exciting ride. It’s the thrill of the chase, the expectation of having the money to grow aggressively, and to paraphrase Sally Field’s 1985 Oscar acceptance speech, a sign that VCs “they like you right now, they really like you.”
At the same time, pursuing venture capital can be time-consuming, exhausting and distracting for startup entrepreneurs who have to spend months doing presentations, travelling and networking to attract investors. Even for startups with excellent prospects, this dance, which can alternate between slow and fast (sort of like Stairway to Heaven) is a necessary and, sometimes, painful part of the process.
It is challenge for entrepreneurs because as much as they might want the capital, it can take them away from running the business, whose ongoing success is a key part of convincing investors to part with their money. In this respect, it can be a delicate balancing act between being out there raising money, and making sure the business continues to execute strategically and tactically.
The best scenario is having a co-founder who can stay behind to steer the ship, while their co-founder focuses on raising money. Even then, it can change the management dynamic when a co-founder is no longer spending as much time in the office. While their fund-raising efforts are certainly appreciated, it can be difficult to keep the same connection when you’re not interacting with employees on a regular basis.
The time and effort required to raise capital is something many startup entrepreneurs don’t appreciate until they find themselves knee-deep in yet another presentation to investors. It is one of the reasons why a startup needs to be ready for VC from an operational, financial and management standpoint. The process can put a lot of stress on a startup, so it needs to be prepared for the process, which can take months.
For entrepreneurs, a key issue is making sure everyone knows what’s involved, and how raising money will change the dynamic, culture and operations. And, of course, once a startup raises money, there are a slew of other changes that will happen.