“We would need to see a product/evidence of traction in the market before discussing further”. You can’t call yourself an entrepreneur if you haven’t heard this sentence before.
But there are companies in need of funding even before there is a product which can attract any traction. And long gone are the days when investors could expect entrepreneurs to work on developing, launching and marketing their product, then growing its traction – for periods of time ranging from 8-18 months, with no income what so ever.
So whenever I hear this kind of sentence, especially after my first introduction was “there’s no product yet and I am not looking for funding yet”, I get upset. Why did that investor ask me to send him my introductory papers, if this is the reply I get from his assistant or partner or co worker? What kind of a conversation is that?
It makes me feel the venture capital industry is getting older and bored. Remember “venture”?
Here’s from The Free Dictionary:
1. An undertaking that is dangerous, daring, or of uncertain outcome.
2. A business enterprise involving some risk in expectation of gain.
3. Something, such as money or cargo, at hazard in a risky enterprise.
It’s the “risk in expectation of gain” that has kept the VC industry going. It’s pretty obvious most investors would do anything to reduce their risks, leaving fewer investors to support younger riskier startups. Pulling out the “traction curse” whenever they want to simply say – `hey, we have less riskier businesses standing in line for our money, why should we gamble on you?`
I have a split loyalty here: I am married to a VC man, yet I am trying to found a startup. So I totally get VCs wanting to cut down their risks and go for surer promises. Obviously if I have a product, it was already launched, I am gaining traction – then I am a safer bet than the entrepreneur I am right now, with a brilliant idea, that needs funding to pay programmers to start developing the product that only I am sure is going to be a hit.
I guess I will just have to dig deeper. I know that out there some investors who are ready to put their money in early stage startups are still looking for great opportunities. It’s going to be a long and hard search. But I know they’re out there and I will start looking for them when I am ready to start looking for funding.
And as for that VC who sent me the automatic traction curse, I think that when I have a product and traction, you’d probably be at the bottom of my list. Simply because I prefer investors who communicate and listen, not just tell.
Just for fun, here’s a song I heard this week, and really listened to the lyrics. I call it “The Entrepreneurship Hymn”. What do you think?