March 6, 2007 7:03am CST
What is the best way or earnig money:?
6 Mar 07
It's a great strategy because the best way to raise money is to ask for advice and the best way to get advice is to ask for money. It's human nature to want what you can't have and to not want what you can have. So why do I take all these meetings when its just an exercise in frustration? Shouldn't I be focused on taking meetings with people who actually do want money? It's a good question. As I've posted before, we like to "hang around the rim" of startups. We want to see the opportunities long before they are ready to take money from our firm. If we can give some good advice, make a few important connections for them, steer them toward good decisions, etc, then we put ourselves in the position of getting the first phone call when they come back for real money. Of course the downside of the cliche of the week is the second part, the best way to get advice is to ask for money. When you are looking for capital, you'll get a lot of advice from VCs. That's just part of the dance. VCs love to give advice. Frankly, its a big part of what we do; before, during, and after we make an investment. That is not to say that we give good advice, although I would suggest that the advice I give is generally pretty good. We had lunch with a couple entrepreneurs yesterday who have been spending the past month raising a first round of capital for their company which they've been operating for almost three years. We got to talking about what they are going to use the money for. And one of the entrepreneurs said, "after all the advice we've gotten from VCs, we need to double the size of the round to do everything we've been advised to do". That got a good laugh from me. Because the best way to get advice is to ask for money. So with all of this in mind, here is my advice (notice that you didn't ask for it:) Make sure to ask for advice from a VC before you want their money. Don't ask for money first. Because the best way to raise money is to ask for advice and the best way to get advice is to ask for money