Startups and Raising Money
It is interesting to notice that when most media outlets discuss the world of startups, they mostly address the issue of fund raising. In some way, it looks cool, especially to magazines and newspapers, to brag about millions of dollars being raised from VCs by a new company. However, what is often not said is that raising money is usually a consequence of making a cool product, and not the other way around.
It is just like the way people look at successful people and see only the money they have. Money is only the consequence of success, not its cause. It is something that comes along with success. There is plenty of people that have large sums of money but unsuccessful (and unhappy) in their lives. By focusing only on the money, there is no way to understand the process that is really going on.
Focus on the creative side
I prefer the strategy used by some new startups. Instead of focusing on the funding part of the equation, try to put your effort on the product and team building first. This has two advantages: (1) it is a more relaxed way to work, since you are not putting pressure on the creating process; (2) it creates value immediately, instead of a debt that has to be repaid with future value.
Now, there is the issue of feasibility for this approach. It clearly depends on what kind of product you want to create. In more traditional industries, product development takes massive amounts of investment. This is not the same in software: one person or a small group can do a lot, if they are experienced and determined.
In the software industry, getting external funding may be more of a hassle than an advantage, because of all the strings that are usually attached to an external investment. Is that what you want to your starting company? Starting with a low profile reduces risk and increases the upside for the founders.
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About the Author
Carlos Oliveira holds a PhD in Systems Engineering and Optimization from University of Florida. He works as a software engineer, with more than 10 years of experience in developing high performance, commercial and scientific applications in C++, Java, and Objective-C. His most Recent Book is Practical C++ Financial Programming.
