VC Minute – quick advice to help startup founders fundraise better.
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There’s another component to talk about on the VC treadmill. And that’s runway. Runway is the amount of time that you give yourself to get from Here to There. .
When you set out to raise a round of capital, you’ll get asked about your runway. This is important because fundraising is a waste of your time.
Okay, I’m being dramatic, but fundraising isn’t the point of the business. The point of the business is to create something of economic value. Fundraising is part of building a highly scalable, fast growing company, and while it brings money in the door, it only indirectly serves a business purpose. You and I both know that your time is better spent building product, acquiring customers, hiring a great team. And fundraising takes time.
For most seed stage startups. This can take around three months or more. I’ve seen it take up to nine months. And while the time to fundraise is shortening, and that’s great, it is still a significant impact on the business.
If it’s going to take you three months to raise a round and your runway is only 12 months. You realistically only have nine months to hit your numbers. In order to level up on the treadmill, can you realistically achieve significant progress in nine months? Probably not.
Let me put it another way. If you had to hit a growth objective, would you want to have nine months to hit that mark or 12? What about blowing it out of the water in 15 months?
Runway is the amount of time that you give your company to hit your metrics to level up on the treadmill. As an investor, I need to be sure that you have enough runway to hit those goals to level up, and still have enough time to raise that next round.
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