Fundraising Rounds Are Not Milestones

It is literally cash and it’s given for good reasons


BEAM Team

8 Feb, 2017

Fundraising Rounds Are Not Milestones | BEAMSTART News

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When meeting with founders for the first time I sometimes hear, “We’re a Series A company.” Meanwhile, YC alumni I talk to tell me that their angel investors regularly ask them, “When are you going to raise a Series A?”.

I’d like to make the point that success isn’t the same as raising a round of financing. Quite the opposite: raising a round should be a byproduct of success. Using fundraising itself as a benchmark is dangerous for the entire community because it encourages a culture of optimizing for short term showmanship instead of making something people want and creating lasting value.

I believe founders, investors, and the tech press should fundamentally change how they think about fundraising. By deemphasizing investment rounds we would have more opportunity to celebrate companies who develop measurable milestones of value creation, focus on serving a customer with a real need, and generate sustainable businesses with good margins.

Optimizing for funding rounds is just as unproductive as optimizing for headcount, press mentions, conference invites, fancy offices, speaking gigs or top line revenue growth with massively negative unit economics.

A financing round is not a milestone. It is literally cash. Sometimes it goes to great companies, sometimes it goes to bad companies. Sometimes it’s given for good reasons, sometimes investors wish they could take it all back. The best early stage founders focus on staying lean, talking to their customers, iterating on their product, and discovering product-market fit.


This article was first published on Y Combinator 

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