Why a Startup should not be focused on raising money

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It was made very clear by my parents early in my life that borrowing money was a bad thing so I shy away from credit as much as I can. I am totally ok with equity… shared risk-reward. However, I do find it very strange when most of the startups that I meet or talk to focus so much on raising funding. This should never be the focus of a startup. Tell me about how you are going to change the world, tell me about your passion and how your team is solving a hard problem and why the value of what you are solving is generating so much interest that you will be making your business viable and sustainable. But sadly, the mainstream media (yes, I am referring to you TechCrunch!) talks about raising money as if it is a validation that the startup has made it or a proxy for the amount of money the startup would eventually make. For those of us investing money know that is never the case, we bet on potential and the team’s ability to execute… there you go I said it, it is a BET. Mark Suster, had an interesting post about the dual metric dilemma Profitability or Growth. I personally like Profitable Growth of course how one getting there is the key. It is different for every company.

User growth, traction, revenue growth and profitability are the main indicators of success for a startup. I hope we can focus on that, obviously getting that data is hard but it would be a better indicator of the growth of startups than the idea or the money they raise.