Last week I was catching up with an entrepreneur that had turned his startup profitable due to the uncertainties around the Covid pandemic. Then, something unexpected happened: a newfound freedom and unexpected sense of calm emerged from being profitable.
Controlling your own destiny, as impossible as it is, is magical.
Turning profitable, and jumping off the fundraising treadmill, is the right course of action for most startups. Yes, there are some winner-take-most/capture-the-market startups where VC makes sense. But, for the vast, vast majority of startups, VC doesn’t make sense.
Once on the venture treadmill, getting off is extremely difficult. The burn rate is aligned for the next funding event. The board composition is aligned for raising more money. The extra office space rented is aligned for raising more money. The promises made to existing investors are aligned for raising more money.
There’s no easy solution once venture money has been raised to change directions.
Raising more money isn’t freedom.
Achieving profitability is freedom.