Don't Let Raising Capital Paralyze Your Company

Okay, I don't understand something.

Some CEOs of seed and early stage companies say that their technology is developed, but the reason they are at $0 sales is because they have been unable to raise money for sales and marketing. That statement doesn't even make sense as I type it.

Here is the way I look at it: If you have time to call me, you have time to call prospects/close deals.

I feel that a lot of potentially great companies get paralyzed raising capital. And some get caught in the trap that they need capital to hire that "VP of Sales." Wrong answer. That great VP of Sales is a luxury sometimes for an early stage company. In my opinion the CEO should be pounding the phone to sell the product - at least at this early stage.

And focusing on partners to resell the product is important, but shouldn't be the sole focus. Get some wins under your belt. Prove that customers need it. Generate some testimonials. That will buy you credibility when you go out and sign partners. More importantly, it gets some revenue.

Comments

[Nathan Dintenfass]

Good advice, overall, but I can't help but play a bit of a devil's advocate here. In some cases a company really will have a hard time selling until they take professional money -- in the mind of a prospective customer having a VC firm they have heard of jump on board does a lot to quiet fears about whether some new company is going to be here next year (let alone next month!). In other cases (most, perhaps) raising money is a full-time job -- you say "if you have time to call me you have time to call customers", and there is some truth to that, certainly. But, for every 1 hour meeting you give an entrepreneur that person had to spend many other hours just getting that meeting with you in many cases, and certainly is spending many hours on getting and responding to meetings with other potential investors. In lots of cases, companies that are far enough along that they can be out there getting non-trivial revenue with real market traction aren't the ones who need to be talking to a professional VC anyway. The pre-revenue situation might not be as simple as you paint it here.

[Nick]

Just letting you know this article has made it to the most popular page on VCNewsCentral.com. Well done!

http://www.vcnewscentral.com/Index.aspx?PageMode=MostVotes

[Garrett French]

There's a good chance a given company's employees are already marketing... I wrote about optimizing employee generated content here:
http://www.marketsmartinteractive.com/articles/harnessing-employee-generated-content.cfm