GO IT ALONE!
To build a fast start-up, says Weintraut, you need to hire fast people. More important than time to market, he says, is “time to hire,” since the latter will determine the former. “An entrepreneur has only one job: to hire,” Weintraut explains. “Starting a company is no longer about raising capital; it’s about raising teams.” The single biggest challenge for any start-up is finding people who will enable you to move fast.
The fast liquidity needs of venture capitalists also means that, in general, they limit their investments to a few sectors where businesses grow rapidly: semiconductors, health care, telecommunications, pharmaceuticals, technology, media, and software.
TWO VERY DIFFERENT PATHS
The above discussion demonstrates the dramatic differences between the incentives of venture-funded companies and go-it-alone initiatives. Venture capital funding is necessarily about managing fast growth with many employees, founders sharing control with investors, and rapidly achieving a liquidity event through a sale of the firm or an IPO. In contrast, go-it-alone initiatives are oriented toward profitable cash flow, growth that is merited by the cash coming in, founders retaining control, limited management, and a focus on a a limited number of employees doing what they do best.
The type of business you have will generally dictate the funding strategy. If you envision a business that will rely on large amounts of capital to get off the ground, then you probably need to raise venture capital. Alternatively, if you are in an industry that is not popular among venture capital investors, you are unlikely to have the real option of seeking this type of
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GO IT ALONE! Copyright 2004 by Bruce Judson. Reprinted by permission of HarperCollins Publishers. All rights reserved.