I’ve always been in awe of startups that come out of nowhere, with no plans to generate revenue – let alone profit – and proceed to raise hundreds of millions in funding. Some are fantastic ideas with immense potential – but the glorification of startups and the image of the high-flying entrepreneur, increasingly visible via shows like The Dragon’s Den, or Shark Tank, seems to propagate a business culture where the goal is no longer about about long-term value creation, but near-term fundraising.
I came across a great article by Darrell Kopke titled Why Dragon’s Den is Killing Business, where he writes:
If start-ups focused more on customer acquisition and revenue generation, entrepreneurs would be able to boot strap themselves to success. By prioritizing sales, not only can you create cash flow, but you actually increase your chances for non-dilutive financing.
The equity in your company is like toothpaste in a toothpaste tube. Once you squeeze it out, it’s hard to get back in.
Like toothpaste it is. Let’s focus on generating revenue, serving our customers, following through, and building real businesses – then, and only then, if it makes business sense – seek external financing.