Why We're Not Raising Funds (Yet)
A short intro: we’re Omni Calculator. We're working on calculators that (will) already know how to solve most of short math problems people encounter. We will replace default calculators pre-installed on smartphones. Our MVP, the Percentage Calculator (iOS, Android) was downloaded 1.5 million times and we haven't spent a penny on marketing.
We've been a part of Batch V of Axel Springer Plug and Play accelerator. One day before the Demo Day I decided: we're not fundraising. Here's a rationale behind that decision.
Because I can’t afford to allocate the time needed. Not now. It’s a weird situation — pursuing investors takes time and what you get is faster growth. So you spend time to get time. We’re (rather slowly) bleeding money and it shouldn’t be very hard to reduce our burn rate to zero, but if instead of working on that I spend my time on chasing VCs, I risk getting into a rather gloomy place if I'm not successful. And as much as I'm confident in my company, I'm not willing to bet everything on us convincing investors.
Because we simply can. This answer might be a bit silly, but VC money doesn't come free and I believe avoiding taking it should always be placed under a serious consideration. Our situation is somewhat atypical - we already have traction, we do have some revenue and we'll try to do it on our own for as long as possible. It will be slower and possibly harder, but I’m fairly certain that it’s doable.
Because fundraising is not something I want to do with my life. I’m a product person and I love doing it. I have talked to quite a few CEOs from funded startups and all of them said fundraising took and still takes them a considerable amount of time. Some said 30%, while some said that’s all they do. Once they get funding, they start seeking investors for the next round almost immediately.
Again, it's not that I wouldn't enjoy parts of it; talking to investors is often great - more often than not they're smart people who can give valuable feedback. Pitching forces you to constantly work on your business plan and keeps you in touch with reality, which is a big advantage to consider. But still, there are unpleasant parts (negotiations, legal crap, being in a disadvantageous position inherent in a world where the demand for money is always bigger than the supply). I don't want my whole day to revolve around it, I'm a product guy.
Because boostrapping is more challenging in those areas that I want to be challenged in. Sure, running a VC-backed startup is hell of a ride. It's stressful, it's crazy fast (or at least should be, if you're doing it right), it's quite a different game. On the other hand, bootstrapping forces you to do more with less. And I love it; it feels like building your first house in Minecraft. Maybe without soiling your pants when zombies come.
Because our goals are different. VCs
wantneed huge returns and are willing to take high risks. That’s their reality and we can’t blame them for only wanting to invest in potentially billion-dollar companies; however, going for such ambitious goals comes with a risk of an uncontrollable nosedive and a rather unpleasant death (you get the money, you have to scale fast... the revenue might not catch up and a follow-up investment is never a sure bet).
Founders won’t admit it, but for most of us, a $50MM exit is functionally pretty much the same as $1B. But they can’t claim they build a $50MM company, because that’s not something VCs want to invest in. Don’t get me wrong, I want us to grow and do great things, but before we get there, there are plenty of smaller goals to achieve, so I’d rather focus on them and not bullshit roadmaps to $1B over the next year. What I want is to make an impact (solve problems for as many people as possible), work on interesting things every day, while simultaneously providing for my family.
Because the game is counterproductive in many cases. VCs look for patterns. They have a checklist in their heads and this is how they filter projects - when you fit into the pattern, you're worthy of looking into. It makes a lot of sense, but it also encourages founders to pretend they fit into those patterns or even worse: to make conformist changes when they don’t make much sense in their startup's particular case. Just filter your decisions through a question: would I have done the same if the investor's opinion wasn't an issue? So instead of making sure I look pretty, I'd rather get shit done.
Because it's not the right time. We spend the last few months developing a post-MVP technology and preparing for the next stage of growth. We'll see fruits of that work over the next few months and we'll be stronger. Simple, let's move on.
Because the moment we become a no-brainer to VCs is the moment we stop needing money. My business is not money-intensive.
Because I’d much rather be in a position when they want us more than we need them. We’re not that far away from that, just give us a bit more time.
I haven't mentioned things that might seem obvious reasons to some: losing control, getting screwed with the terms, etc. These are not problematic in my opinion, as they can be easily avoided if you're well prepared and are not willing to get strong-armed into a lousy deal just to get the cash.
I’m not fundamentally opposed to the whole VC model, as it's clearly working and it made countless awesome businesses possible. I'm not even opposed to us going down the VC route. What I'm mainly against is the costs inherently tied to fundraising: time, focus and staying in line with your true vision (not the one you're selling). So, if it's going to happen, it will be because they will have knocked on our door, not me knocking on 50 of their doors.