VC Investment is always Plan B

I have been mentoring startups for several years now and in the first meeting itself, I am often asked?

Can you help getting my startup funded?

I cringe every time I hear this.

There is a general belief that success of startups are always hinged on Funding. To get the record straight that funding is always byproduct of starting up and the future of the startup should never be wholly dependent of funding. You build your business with Plan A without any funding. Your startup should have a plan where the business is able to grow and scale. When the startups begins to grow and scale, you may look at a plan B, where funding helps you grow faster and more efficiently.

When you make an investor pitch, you should follow these steps sequentially

1. Always show them your Plan A where you grow the business without any funding.

2. Follow up with the plan B that shows VC investment, accelerated growth and potential returns.

3. Highlight how the investors will miss out if they do not fund the venture.

4. Next, ask the investors how they will be able to add value to the venture and to your plan B.

Now we are talking business. Startup is adding value to the fund and you negotiate hard.

VC Investment for startups is always PLAN B and never PLAN A