A decade ago, I was helping an entrepreneur with a fast-growing, successful business. At the time, he felt that he had to raise venture capital. Initially, I thought it was the typical story of needing more money, the opportunity to capture market share, and the desire to grow faster. Only after digging in some more did I realize that his main reason for wanting to raise venture capital was a combination of having someone experienced to ride alongside him and the expertise offered by this particular venture firm. This expertise is often positioned with terms like “centers of excellence,” “operating partner,” or “consulting teams,” which are basically in-house specialty functions within venture firms to support entrepreneurs.
This approach was originally popularized in the Hollywood world and then adapted to the venture world, made well-known by the venture firm Andreessen Horowitz, also known as A16Z. For this particular entrepreneur and the venture firm he was talking to, it wasn’t A16Z, but it was another firm with a great reputation and a strong consulting team as part of their offering.
After spending time with the entrepreneur to understand where he really wanted help—with respect to pricing, packaging, recruiting, strategic planning, and product management—it became clear that what he really needed was a series of boutique consultants, experts in their craft, that he could call and build a relationship with. He could develop a retainer fee structure if needed but really have direct access to these specialists. He did not need to raise venture capital to do so.
After six months of playing the fundraising game and going back and forth as to whether or not he should take the money, he ultimately decided not to. He continued to grow the business organically and build out a network of experts to hire directly without having to take on venture capital.
My recommendation for entrepreneurs looking for help and expertise in their business is not to feel like they have to raise venture capital to find people who can help. The great thing about the startup community and the size and scale of the startup industry is that we now have experts across the board. Founders would do well to build out their own team of experts.
Entrepreneur
via https://www.aiupnow.com
David Cummings, Khareem Sudlow
