Early-Stage VCs Invest in Startups, Not Businesses — Make Sure You Know the Difference
If you’re struggling to raise your early rounds of capital, this could be the reason
During one particularly memorable fundraising pitch, the venture capitalist I was meeting asked me to describe my target customer. It’s a question I felt prepared for because it’s a question every VC wants answered. More importantly, it’s also a question every entrepreneur needs to be able to answer for themselves. After all, if you don’t know who your ideal customer is, how are you going to know who to sell to?
I confidently replied: “Our product bridges the gap between marketing and sales teams, so our ideal customer is either a sales or marketing leader at a mid-sized tech company.”
The VC laughed. It was not the reaction I’d hoped for.
“Why is that funny?” I asked. By that point, I’d spent the better part of a year talking with potential customers, and I was certain I knew what types of users benefited most from our product. But the VC didn’t seem to care.
“You’re pitching a business,” he replied, “but I’m an early-stage investor. I only invest in startups.”
