VC’s Are Great, But Not For Funding Your Startup

On the heels of an amazingly successful GROW Conference last week in Vancouver, I thought this article may serve as some timely advice.

It pains me how often I hear from an aspiring new CEO or founder how he/she has a great business plan and is ready to be introduced to venture capitalists across North America, all of which would roll over their own mothers to invest in this new CEO’s amazing startup. “It will be better than Facebook/Google/Apple” has become so common, I’ve started a drinking game to make these events even more enjoyable.

I’ve been there and done that and over the past 10 years, let me offer just one piece of advice to the armies of ambitious and bright-eyed entrepreneurs amassing across the connected world: Avoid VCs for financing your startup.

At least for the first 3 years. Don’t be so naive.

It’s not that I doubt the passionate entrepreneur’s goals and dreams. When I was starting out, I was always advised to “think big, never set your sights too low!” And when I had a slide in my first pitch deck that read: “Just 1% of the market is HUGE” – I learned to remove it and replace it with: “100% marketshare = $Bn.” Always dream big, always make your goals big, you must always over achieve if you want to stand out. Mediocrity has no place in this new startup economy.

The purpose of the lesson above was to demonstrate that the advice I’ve gained over the years has not come from school, has not come from mentoring sessions, has not come from networking events – it has come from hundreds upon hundreds of VC meetings. And I have a 100% track record of winning with every VC meeting, I always achieved my goal: amazingly intelligent, well-thought out, FREE business advice from some of the most experienced, most intelligent investor-advisors.

Think about that for a moment, let the epiphany set in. In every VC meeting, inevitably, the VC partners slice and dice up your business plan or pitch deck like they’re the next Slap Chop pitch man. They point out numerous errors in your model, they ask you difficult questions to which you attempt to make up intelligent answers on the spot (and they catch those too).

But the best entrepreneur doesn’t walk out battered and bruised, he/she walks out better, smarter and ready to make the adjustments, the pivots or the decisions to make their startup better.

Every bit of criticism we receive from VCs should be treated like a diamond. You are literally receiving free advice from some of the smartest minds in the world. They have seen great successes but they have seen even more failures. They know what works, they know what doesn’t and they have the scars to prove it. Rather than dismissing them as “arrogant” or “know-it-alls” (as I’ve done in the past), we should embrace and soak up every last bit of advice we can. That hour you spend with a VC is worth millions, even billions.

Albert Einstein said: “ninety-nine failed solutions equals a gain of 99 pieces of information” and that law applies beautifully to the ninety-nine VC meetings you will have before that 1 perfect meeting that will result in funding.