Introduction To Me and My Dumb Mistakes
“The course of rap, I’m turnin’ it…back to that good ol’ fashion way of gettin’ cash money, by earnin’ it!” — KRS-One
TL;DR —
- Don’t try to raise money.
- You’re probably going to fail at it.
- If the first two bullets didn’t shake your confidence, you should probably take time to read the rest of this article.
When people ask me for advice on starting a business or raising money, I have to stop myself from immediately telling them not to. No matter what they do, things aren’t going to go according to plan. Just because I’m the CEO of MeterFeeder, and raised a modest amount of capital, doesn’t mean that I know the silver bullet that will land you funding every single time.
Once we developed the the concept for MeterFeeder, we applied to Y Combinator, a startup accelerator. We approached them with our product: an easy to implement, low cost parking payment app and enforcement kit. It would allow municipalities with smaller budgets to be able to modernize their parking infrastructure. Not very exciting, but its an industry that hasn’t seen much innovation in a long time.
When we were accepted into Y Combinator, I thought I was on Easy Street. I thought the hard part was over. I thought that the capital investments would come flowing in. At this point in my life, I would have told people to just get into an accelerator and that the money would come. In hindsight, I don’t that I could have sunken any deeper into the pit of untruth. I took off for Silicon Valley, leaving my 12 day old son with my wife for four months. I was expecting to learn a lot, meet a lot of people, and come out on top. But then a series of unfortunate events unfolded, and I realized that nothing goes according to plan.
The day after we gave our demo, a competitor announced that they copied our key differentiator. We were building a relationship with our first huge customer, only to be misquoted by the press and leave our relationship in ruins. We decided that we would move our headquarters back to Pittsburgh, which our Silicon Valley investors weren’t happy about. Our number of potential investors was diminishing.
We went for a long time without getting any new major funding. My co-founder and I had to have a hard talk with each other. Do we keep trying to raise capital from investors? Should I start b-boying on the street for spare change? Should I start selling spare plasma? The short answer: No.
Why should we beg investors to give us money, when we could just make money ourselves? We knew we had a great product that a huge number of the municipalities around Pittsburgh could benefit from. We just needed to tighten our belts, come up with a plan, and execute it. We were out of the mindset that we needed someone else’s money. The game had officially changed.
We expanded our service to more small municipalities, while working on a couple new products as well. When we announced Pay-By-Vehicle I was approached by an investor. The conversation made me feel like I’ve found some sort of magical incantation to have investors give us capital:
Investor X: “Cool stuff. Say, are you guys raising money?”
Me: “Nope. Because it’s way easier for us to raise revenue, than to raise capital”.
Investor X: “Sooo….would you take a check if i wrote you one?”
Me: “Yep”.
It wasn’t the words that changed my interactions with investors. It was the situation that I was in. Don’t raise money before you’re ready. Assume that you’re going to need to bootstrap forever. In the early stages, investors probably aren’t going to give you money so you can have a comfortable life. They’re trying to help you grow your business. If you prove that you’re going to build it with or without them, then they will be more confident in partnering with you. Not to mention you’ll be more confident in yourself and in your business.
