In my case, I didn’t need any money to... - Deepstash

In my case, I didn’t need any money to get started — I’m able to do all of the work in my business currently and I have built up a personal runway over the years that gives me the freedom to work for some time before getting significant sales. And I’m not trying to target a huge market — in fact, my market is pretty niche (local news sites and other small online publishers).

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MORE IDEAS FROM The Startup Rules You Should Break If You Don’t Have VC Investors

One of my biggest pet peeves when it comes to the startup ecosystem is the number of startup coaches out there spouting the same recycled wisdom from Steve Blank or the Lean Startup about how you have to “ get out of the building “ and talk to X potential customers before you even start building your idea.

What frustrates me about this advice is that I’ve seen it deter lots of people from making any real progress on their ideas. Often they give up altogether because they think that since they can’t find enough people to interview, then entrepreneurship must not be for them.

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As a solo founder, I started off by breaking one of the cardinal VC rules that says you can’t build a successful startup on your own. Never mind the research that says solo-founded companies are twice as likely to become profitable as companies with multiple founders. No, what this rule really means is that VC firms will not fund startups with just one founder.

This is because VCs don’t just care about if you can get things done. Seeing multiple co-founders shows a VC that this person can sell their vision to other people and it gives the VC insurance in case one of the founders burns out.

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As someone who has helped lead a successful funding round for a VC-backed startup, I have a pretty good idea of what it takes to get a venture capital firm to buy into your vision and cut you a check.

Yet for my current project, Epilocal , I decided that I didn’t even want to go down that path. In fact, I ruled out VC funding from the moment I started.

This is not to say that I have anything against venture capital. I think that VC funds fill a necessary role, but that role is very specific. VCs exist to find and fund the businesses that need capital in order to compete in a huge market.

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One of the main things that VCs are looking for is a huge target market, usually at least $1 billion, that you can address through your startup. The reason for this is simple: VCs invest in multiple startups with the understanding that some of them will fail, some of them will not grow very much, and a couple will make it big.

Given the fact that VCs need to provide returns to their investors that are far better than the stock market to justify their worth, they need those few winners to make it very big. As a result, VC funds look for startups to invest in that can “ return their fund .”

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All new posts will be made available first at the Epilocal Open Blog , where you can sign up for special behind-the-scenes content from my newsletter. You can also follow me on Twitter .

Originally published at https://www.epilocal.com .

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As mentioned before, VCs are looking to fund companies that can capture huge markets. As a result, they’re not interested in building businesses that can comfortably sustain founders and employees.

If they can’t get an exit that contributes to their returns in a set period of time, then it is a failure. Period.

As a result, VCs would prefer for a startup to go bust early if it doesn’t have a chance to become a big winner. This way they can focus their attention on the startups that do have a chance of making them money.

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RELATED IDEA

Fundraising sources

Fundraising is both a science and an art. The method that a startup uses to raise money helps determine its financial situation and how much help and advice the startup receives along the way.

Startups may initially use personal or family funds to start the business, but crowdfunding has also grown in popularity. Still, venture capital funding is the dominant source and is at an all-time high in recent years; CB insights reports that U.S.-based venture capital investments totaled $130 billion in 2020.

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Best for the latest European startup news: Sifted

Backed by the Financial Times, Sifted publishes news and views across the entire European startup ecosystem. From funding rounds to thought-provoking commentary from some of the startup world’s most successful founders, Sifted is the place to go to find upcoming trends, hard-hitting startup journalism, and excellent think-pieces. 

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60% Were Not First-Time Founders
  1. Among the founders of billion-dollar startups, almost 60% were not first-time founders.
  2. In a randomly selected group of startups that had raised a minimum of $3 million in venture capital funding but didn’t reach unicorn status — the typical picture for a seed-funded startup — about 40% were not first-time founders.
  3. The statistic shows that repeat founders were more likely to start a billion-dollar company.
  4. This is not to discourage first-time founders. It is rather to encourage those with a failed or those with a small outcome in the first attempt to go at it again.

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