Funding announcements are very boring, both to read and to write. But they’re covered everyday on tech sites, whether an entrepreneur has raised $400,000 or $400 million.
The amount of money raised has become a way some people benchmark a startup’s success. The more an investor pours into a startup, the better the startup’s idea and team must be. It will have enough money to live a little longer, at the very least.
Last night on the season finale of Bloomberg’s Techstars show, one of the founders said he spent the summer generating revenue rather than raising a round of financing.
No one in the audience applauded. But they did when Onswipe announced a $5 million round and Crowdtwist announced a $6 million round.
“I’m concerned a little bit with the culture of celebrating the fundraise,” he said. “My dad taught me that when you borrow money it’s the worst day of your life. We didn’t clap for Red Rover because they didn’t raise $6 trillion, but I was sitting here like, ‘Good stuff!'”
Very good point!! Fundraising is just a middle step, and it may or may not lead to final market success.