Here is the best fundraising advice you will ever hear

I am often ask here at EVC Ventures — What is that one advice you would give to your startup founders that surpasses creeds and half-baked truths, which is relevant right now in this moment?

The last part makes the question tough one. Wisdom used to mean different things at different times and for different people depending on their context. Not one single startup journey is same like the other and everyone must walk the path for himself. Like choosing your personal religion that will take you to the truth you seek.

Yes, I got an advice and it doesn’t come from me. It comes from another person and I read it recently. A person whose very life time is a legacy and his work could probably fill up a library.

It is what Seth Godin has said — something about raising money. After all this may be one thing that is relevant today for every startup in every stage, and I don’t necessarily say that is a good thing:

There’s a huge difference between spending money on expenses and spending money to build an asset.

Therefore you should not borrow money if it is for the purpose of covering up your expenses.

Seth sums it up nicely. Ice at a picnic is an expense. Once it melts, it’s gone. Your electric bill, rent — these are costs of doing business, and you should rarely if ever borrow money to pay them.

Assets, on the other hand, are things that sustain or grow in value that you can use again and again, and that are ultimately worth more than they cost.

It is easy to confuse the both. It is easy to be seduced into dreaming bigger and bigger. It is easy to fool yourself of how unique your vision is. Take all the hype from the “science” of startups going on these days and you will see that what is left is something very practical. Startups are indeed a very practical journey.

Don’t borrow money to pay for your expenses. If you are in such situation, stick to your job for little longer or for as long as you can. Borrow money to build assets whose value increases over time and can be sold nicely or add up to your reputation, to the brand you’ve started building.

What is an asset? Your email list is an asset. The people that come to your weekly meetups are an asset. Your brand is an asset. Therefore it makes sense to borrow only if you have a clear path of how the money will grow these assets, otherwise it is just a waste.

Have you figured out your assets yet? You better do quickly before you go for that money. Perhaps you shouldn’t do it after all. Perhaps the only people you should be raising money from are your customers by selling them a product they’d love to use.

Every single startup we have invested so far has done that exact time. They raised from their customers. It only made sense for us to fund them because they have obtained so many voted of confidence.

Why don’t you try to do the same thing?