Most startups should not waste time hunting for VC investment. The VC model is limited in applicability, demanding high growth and large exits in a limited time window.
In 2010, we were on the fence about whether or not to raise VC investment. Every other company in our space had raised $10 million or more. So we figured we should go out and look too.
Overall, the process was very time-intensive and distracting for our business. We had lame situations such as the one I wrote about before with Sequoia Capital.
However, the process of being on the hunt for VC investment had several benefits. I recently ran across a post that articulates nicely the same benefits that we received on our fundraising hunt, as these:
- The fundraising process forces you to better define and defend your business strategy.
- The fundraising process allows you to hone your strategy and your pitch.
- The fundraising process will disabuse you of your misconceptions.
- The fundraising process will provide you with valuable market intelligence.
- The fundraising process will help you determine if you have the right team.
I’m grateful for each of those benefits that resulted from our VC search in 2010.
What are your thoughts on the benefits of hunting for VC investment?