Raising Venture Capital These Days
from the helps-to-have-done-it-before dept
The Washington Post is running a story where they followed around an entrepreneur to see just how difficult it is to raise money for a brand new startup these days. Turns out, based on this article, it’s not difficult at all. All you need to do is have built a successful startup before which you sold off for millions of dollars making the same investors who invested in you last time, willing to dump their latest cash into whatever you come up with this time. Nothing to it. I’m surprised everyone doesn’t do it that way. Honestly, I think this is a terrible article. I think it’s a useless example of what it’s really like to raise money, since they don’t show him actually being tested at all. If you want to actually try to raise money from a venture capitalist (especially in today’s market) don’t expect it to be anything like what’s described in that article.
Comments on “Raising Venture Capital These Days”
I do know
I’ve been working with VCs for quite a while, all during the current downturn. And I can tell you, that each VC has their own particular excuse about why a company isn’t worth investing in — usually because they can’t come in, pick up broken pieces and turn them around for a quick return, which really is today’s M.O.
The situation is the way it has always been: it’s who you know. That is the path to funding. That’s what the article suggests, and it’s basically the truth.
Re: I do know
Oh, it’s always been about who you know… even well before the downturn. However, the idea that you’ll just meet with three venture capitalists (even if they know you) and they’ll just agree to give you money for a very vague idea is really unlikely. Even worse, the fact that the first VC gave the guy $250,000 to tide him over while he raised the rest… that very very rarely happens. Even if you know the VCs. I’m just amazed that the article was indicating that this was a “tough” process in how he raised money.
I’ve been hearing stories about people who have been very successful, and who have great ideas, and who know plenty of VCs getting turned down or getting pushed off for months on end. I think the article is quite misleading.
Mile Wide, Inch Deep
The article misses several important facts – leaving the conclusion that pv basically walked around and had everyone punch his ticket so he could collect the $3 million. The article does a disservice both to readers, who are left with an inacurate perception of what it takes to get funded, and to pv and his team. The article tends to understate the amount of work that pv himself put into the effort, minimizes the efforts of his staff, and completely ignores several other people who worked on the project.
That said, if you’re looking to the Post business section for your dose of real world, slice of life journalism – you’re probably looking in the wrong spot.