Why Raising Money for Your Tech Startup Is a Waste of Time

Unless you live in California, New York, or another city full of investors, raising money can be a daunting challenge. Pitching to investors isn’t just standing in a room with a PowerPoint for 10 minutes explaining what your company does. It’s so much more. Yes you have to spend a lot of time creating the information and graphics that go into your PowerPoint, but you also have to practice that PowerPoint and get it out to people to get feedback. Then based on the feedback and your story, you have to continuously update the information and graphics in the presentation.

The next thing you have to do is create all of the proper documentation that investors request, and continuously update those as well. This can include but is not limited to a business plan, an executive summary, financial projections, plans of action, operational plans, team biographies, job descriptions, where you plan on allocating the funds, and the list goes on. Then once investors receive these documents and see your presentation you have to prepare yourself for the questions they are going to ask you, such as how you are going to grow, or how your product will go viral, and other high-level questions like those.

The big problem with fundraising, isn’t even all of these things. The problem is that while you are doing these things, you are being extremely distracted from what you should be doing…Building your product. Time and time again when you are emailing investors, researching their websites, talking to them on the phone, setting up meetings, traveling to different cities, and basically wasting time, you should be focusing on optimizing and refining your marketing materials for consumers, as well as making sure your developers are creating the best possible user experience for your platform.

In a perfect world, entrepreneurs should not have to pitch investors. Instead, their products will speak for themselves and attract the investors as a result. If an investor sees a product that he or she likes, they will simply reach out to the entrepreneur or the team, and ask for a meeting. The result of that meeting should either end in a check written immediately, or a term sheet where the team can negotiate terms after reviewing the documents with their lawyers. But instead, the usual situation is a team pitches investors over and over again, without a check ever written. This can go on for months or even over a year, and what happens is you get frustrated, and stressed out. Founders, then start to resent their company and their team members because of the time they are wasting pitching investors. This, because when investors don’t cut checks, the entrepreneurs lose faith in their idea.

My advice to any entrepreneur who has a tech startup: focus on building your product, focus on marketing your product, focus on building your team to the best that it can be, and above all, run your company as if you were funded, so that when you do get funding, you are already doing what you are supposed to be doing.

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