The Cold Reality of First-Time Funding

Giff Constable startups, venture capital

Earlier today, I watched Fred Wilson and Ben Horowitz debate lean vs fat fundraising approaches (very different from “lean startup” concepts even if often confused). The reality is very very simple: unless you are a celebrity/proven founder, “lean” is your only option. I don’t buy for a second that Horowitz would write a “fat” check to an unproven entrepreneur no matter how big the idea.

Too many people think they can raise money on an idea, a powerpoint deck, or even a mere prototype. From what I see, that is the exception, not the norm, regardless of chatter about a lot of seed money swirling around.

An idea and vision is necessary but not enough. Maniacal zeal is necessary but not enough. A smart, clued-in team is necessary but not enough. A first version of the product is necessary but not enough. You are competing against other funding-hopeful startups that have achieved all that PLUS initial traction PLUS a fit with the investor’s sweet spot.

It is not that the bar keeps moving in front of you, but rather that the bar has been at that spot for quite a while. Investors and the media just rarely clearly acknowledge this fact.

In Software/Internet, this means that you need to boil your very big idea down to something achievable. You don’t give up on the big idea, but you have to get ruthlessly pragmatic about the steps to accomplish the dream. This feels painful but it brings discipline and focus. You will burn through savings. You might have to consult on the side. You will move agonizingly slower than you want. Even worse, you will risk a more established entrepreneur wading into your space and raising a bunch of money with what seems like a snap of the finger. But that’s what it takes. It’s not for the faint of heart, but goddamn, there is *nothing* like it.


  • For a great post on the topic from an early-stage investor, see Eric Paley’s Stuck on Ramen
  • For many great tips, see Venture Hacks
  • For an excellent book on Venture Capital, get Jeffrey Bussgang’s Mastering the VC Game — to be honest, I was expecting another bland overview of the VC world where nothing of substance gets disclosed, but Bussgang writes clearly and with much more honesty than most. So thumbs up from me, although the only *real* way to learn about all this is to privately talk to other entrepreneurs who have been through it.

P.S. for those curious, in Aprizi’s case, we did a very small F&F round and do not consider ourselves ready to do a seed round (much to the chagrin of my wife). We quietly shifted to open beta just recently, and we know that we have more to accomplish and prove. We do talk to investors here and there, but only to get feedback and new perspectives on our plans.  Right now, it’s all about execution. If you know of a great web developer in New York looking for a great team and new challenge, send them my way (giff.constable @gmail)!