From Pieter Welten – Prime Ventures (@PieterWelten)
Some entrepreneurs can fund and grow their businesses in its entirety by cash generated from customers. I highly respect those entrepreneurs; it is very challenging to get into such privileged position! When I discuss venture capital and its advantages with some of them, though, I sometimes get the feeling that my arguments are perceived differently and with suspicion. As if I want to take advantage or sell them a pig in a poke (in Dutch: ‘een kat in een zak’). I never argue that venture capital will do definitely good to your company; raising venture capital should never be an objective for any company. However, I do argue that it can be an interesting opportunity to jump-start your growth!
Therefore, as an entrepreneur, especially one with big ambitions, I believe it is worth considering external funding once in a while. It happens that some of today’s best well-know technology companies in the world did raise venture capital. To many of them it did (so far) do good to them. Perhaps you have heard from the following ‘start-ups’:
Spotify, Palantir, Xiaomi, Pinterest, Flipkart, Didu Kuaidi, Airbnb, Uber, Twitter, Linkedin, Facebook, Digital Origin, Amazon, Google, Supercell, Takeaway.com, Adyen, Klarna, Criteo, Snapchat, Elastic, Dropbox, Lyft, Stripe, Just Eat, DocuSign, HelloFresh, Slack, AppDynamics, Funding Circle, Mendix, Magic Leap, Prosper, Skype, SurveyMonkey, HomeAway, Skyscanner, BlaBlaCar, MongoDB, iwoca, AppNexus, Slimpay, GrubHub, Jet.com, Thumbtack, Cloudera, Okta, Eventbrite, Evernote, Docker, Warby Parker, Catawiki, Kabbage, Falcon Social, Dollar Shave Club, WeTransfer, Shazam, TransferWise, Deliveroo, Magic Pony Technology, Digital Shadows, Social Point, HotelTonight, Box, Domo, Glassdoor, Tanium, Apttus, SoFi, Pluralsight, Zuora, Dealer Direct, Illumio, EatStreet and Medallia.
Richard Branson recently argued that a ‘growth mindset’ is vital in order to excel as an entrepreneur. In his view you need to be willing to learn, make mistakes and experiment. In my view, venture capital allows you to do all of this. Moreover, as a more late stage, profitable start-up, the drawbacks of venture capital have largely disappeared since you, as founder or CEO, are in the driver’s seat. Not us investors. You can dictate deal terms and conditions.
Anyhow, I highly doubt that the vast majority of abovementioned ‘start-ups’ would be where they are today without having taken any external investment. As an investor, I’d advice any entrepreneur to consider external capital every 12-18 months if you have international ambitions. Simply consider it for a couple of weeks and talk to a couple of investors. Then decide to go for it or wait for another year or so… I can promise you this; it doesn’t hurt your business to talk.
