From a successful VC… 

These days… I pinch myself.  How, on earth, did I manage to bring the company to where it is?  I’m not alone, don’t get me wrong.  We have assembled a great team.

But when it comes to financing the company, I have been alone.  When I launched Mojo Supreme in 2005 and then WatchMojo.com in 2006, I thought I could fund the company for a few months, maybe a couple of quarters.  A frivolous lawsuit made raising funding impossible… and even once that was settled, an out-of-vogue business (video content) could not close the deal.  Even when I would get close to sealing the deal, a term sheet’s draconian clauses would turn me off.  Ironically though, by the end of year last year, I thought I had run out of runway, with no options left.  Somehow, some way, I managed to extend the inevitable and here we are… probably on better footing than at any other time in our history.

In an ironic twist, if (don’t want to jinx anything now) we survive let alone thrive, it will be because we never raised VC, and not because of it.  For some context, from Forbes:

The entire portfolio of the California Public Employees Retirement Fund, for example, a major investor in venture funds, is down 20% and needs to raise capital. Cash will be scarce in 2009, no matter if you’re a pension fund, a VC or a start-up. Wall Street is broken.

It’s really ironic, but had we raised money last year… we would have been forced to grow very quickly initially, add a bunch of useless people and positions; our costs would have mushroomed; our revenues?  Not sure. 

But the financial meltdown would have forced us to a) reduce costs, b) lay people off, and c) maybe even shut down.

When you raise money from VCs, they basically control the purse strings, so if they decide “not to approve the budget”, you have to basically shut down and return whatever money you raised to the investors.  Crazy… but the key to surviving and thriving will probably be staying independent and small.

One of the biggest cliches and lies VC tell is “raise as much money as you can”.  That’s BS.  When it comes to dealing with VCs, equity isn’t the most important thing, it’s the only thing (to quote Felix Dennis).  But more on that in a separate post.