Should founders treat raising venture capital as a necessary default, or a deliberate strategic choice?

Paul Graham · published Sep 2013

Fundraising is not a defining quality of a startup — rapid growth is — so a startup that wouldn't want to grow faster or wouldn't be helped by outside money shouldn't raise it.

Nearly all successful startups raise money only because taking outside money helps them grow faster and their growth potential makes money easy to attract; where those conditions don't hold, the rationale disappears.

Scope: exceptional cases

source How to Raise Money

Will Quist · published Sep 12, 2022

Many founders seek venture capital who don't need it or aren't a fit for it, and should slow down before raising to establish their unfair insight, product value theory and right capitalization path

Venture is a very specific product; a universal understanding of what calls for venture and what doesn't would save enormous time and heartbreak for all parties

40:04 20VC: Why 95% of Venture Capital is Not Really "Venture Capital" | The Five Core Levers Needed To Assess Risk and Price a Startup | The Future of Venture; Who Wins, Who Loses, What Happens to the Crossover Funds with Will Quist, Partner @ Slow Ventures

Jason Fried · published Jan 6, 2023

The dominant startup narrative — that you need to raise a lot of money and grow as big as possible — is misleading, because most companies are in fact self-funded, bootstrapped and small

Big funded startups get all the news coverage, so people leaving school believe raising a big round is the only way to do it

Scope: he thinks the narrative is starting to change now

35:00 20VC: Why Financial Planning and Goals Do Not Work, The Decision to Ban Politics in the Workplace and Losing 1/3 of the Team Overnight & The One Question That Will Drive All Decision-Making for Leaders with Jason Fried, CEO @ 37Signals

Mike Salguero · published Apr 5, 2023

The thing most in need of changing about venture is that most founders don't think before they start raising, wrongly assuming they must raise money to build a successful business

Founders default into fundraising as a prerequisite rather than a choice

Scope: acknowledges some VCs tell founders not to raise if they aren't committed to the VC path

69:46 20VC: The Memo: Scaling to $600M Revenues with No Venture Funding, The Most In Detail Breakdown of Consumer Subscription Unit Economics & Why D2C and Consumer Subscription is Not a VC Backable Model with Mike Salguero, Founder @ ButcherBox

Paul Graham · published Sep 2012

Founders take VC money because growing too slowly is dangerous: if you have a scalable idea and don't grow fast, competitors will, especially in businesses with network effects.

The constraint between good ideas and growth runs both ways, and the best startups usually have some degree of network effects.

source Slow growth risks losing to faster growing competitors especially with network effects justifying raising vc money