Your Self-Worth Should Not Be Defined by How Much Funding You’ve Raised – Pitching Angels

Focus on building products and serving customers instead of obsessing over raises and valuations

At a recent startup gathering, while I was waiting in line at the bar, I listened to a circle of young founders introducing themselves to each other. The conversation went something like this:

“My startup just raised a pre-seed funding round of $5 million on an $18 million valuation.” This founder looked impressed with himself as he sipped on his Triple IPA.

“That’s nothing,” the bro next to him said rather dismissively. “We just wrapped up our $12 million seed round at a $52 million valuation.” He looked like the kind of hard charging CEO we’ll read about in a few years from employee lawsuits.

The scruffy haired guy next to him who hadn’t shaved in a year put the bro in his place: “We signed a term sheet yesterday with Sam Hill Ventures for a $25 million Series A at an $82 million valuation.”

The boy next to him who couldn’t have graduated high school yet trumped them all. “How cute,” he said, sipping his bubbly water. “My AI startup raised $320 million last month on a $2 billion valuation.” And he didn’t even have a product yet.

All four of them turned to the lone woman in the circle. Let’s call her Katie. The two billion dollar boy asked her, “How about you?”

Katie looked up sheepishly. “I’m just starting my raise,” she admitted, embarrassed.

Trying to throw her a lifeline, the beard asked, “How much are you raising?”

“Um, well, I’m thinking maybe…$750K?”

“$750K!” whooped Mr. Triple IPA, relieved he wasn’t the low man on the venture totem pole. “VCs won’t even talk to you unless you’re raising at least $5 million.”

Knowing nods went around the circle until all eyes returned to the two billion dollar boy. He was a god in their midst. They all wanted a piece of his magic. They wanted to know how he’d done it. They wanted to know how they, too, could reach a valuation of $2 billion and fly on the wings of a unicorn up to the pinnacle of Mt. Olympus.

I was tempted to interrupt their money lovefest and advise them to grow up. But it wasn’t my place to be the curmudgeonly old guy in this room. I grabbed my whiskey and went in search of a group of adults to commiserate with, inserting myself into a circle of polo shirts on the other side of the room. I was certain I’d elicit sympathy from the other grayhairs.

We went around the circle introducing ourselves, starting with a youngish man recently graduated from Harvard Business School (he made sure to tell us), a partner at a fresh $100M fund investing in sustainability.

That failed to impress the woman sipping a Coke who led a $250M corporate VC at a famous brand (lifting her Coke) investing in the latest trends in consumer food and beverage.

Then the older man on the other side took a gulp of his bourbon and announced himself as the general partner at a billion dollar fund investing in AI. The other two gasped. They were standing next to an actual fabled Unicorn Maker.

The Unicorn Maker looked over at me and asked who I was. “Angel investor,” I said. “Focusing on climatetech,” I added, glancing over to Mr. Harvard, the sustainability VC.

Mr. Harvard looked at me like a fly in his soup. “How big a check do you write?” he asked with a chuckle, eliciting sad nods from the others. I wanted to punch him in his perfect haircut. I added I was a startup mentor and a top writer on Medium, hoping to move up from fly to perhaps grasshopper on the venture evolutionary tree.

“How many unicorns have you been on the board of?” Ms. Coke asked dismissively. I didn’t bother to answer.

“Two!” said Mr. Harvard. When that failed to impress the others, he added, “And two more that will become unicorns in their next round.”

The Unicorn Maker took another gulp of bourbon. “Twelve, I think,” he said, swirling the ice in his glass. “I lose track these days.”

There was little for me to say as I listened to their conversation. No surprise, it was about money — how much they had, how much they’d invested, how much they’d made in exits. They regaled each other with their best deals, their biggest investments, and most of all, the size of their returns.

I guess I shouldn’t have expected more — after all, this was Venture Capital, with a capital C. They were capitalists. What disappointed me, though, was I didn’t hear any pride in the companies they’d invested in other than their financial returns. Nothing about the impact those startups had made or what they had accomplished. Still, I shouldn’t have been surprised. Their jobs, their careers, their oversized houses and yachts came from making money for other people.

I had higher hopes for the startup founders. Working with pre-seed and pre-pre-seed startups, I meet so many founders with a passion for what they’re doing. There is always a problem they desperately want to solve.

Whether that’s a big problem like climate change, or a small one like making QA testing faster, the goal is to build a solution that people need. Venture capital is a means to that end, like a bank loan to buy a home, or a 401(k) to save for retirement.

But somehow once entrepreneurs get sucked into the VC ecosystem, everything, including their self-worth becomes about fundraising: how much they’ve raised, at what valuation, from what big name VC is suddenly more important than the product, customers, and users.

It was only a matter of time before Katie and I, both outcasts from our circles, sat down together. I learned she had a Ph.D. in chemistry and together with her professor, had invented a technology to recycle plastics. Wow. I’d much rather have a beer with her then Mr. Triple IPA.

She didn’t need to raise venture funding, at least not yet, because she already had customers paying for her products. Seriously??? She’d beaten the self-centered boys by a mile! So why was she feeling unworthy in this crowd, not standing tall and shouting her accomplishments?

Unfortunately, that’s the venture world. If you’ve raised zero dollars, you’re considered a zero. Even building a successful business barely registers, and certainly not if you’ve built it from your own sweat, tears, and savings instead of losing billions of other people’s money. I hate to make sweeping value judgements, but this is seriously wrong.

It starts in college entrepreneurship programs which teach how to raise money from VCs instead of how to build products for customers and create strong, profitable businesses. It continues through accelerators that focus on building pitch decks and meeting investors, the bigger the better. They trumpet how much their cohorts have raised instead of how much revenue they’ve generated, how much CO2 they’ve eliminated, how many patients they’ve cured, how many customer hours they’ve saved, or how many jobs they’ve created.

This is not how we should define success and certainly not how we should define ourselves.

We need to celebrate scrappy entrepreneurs who bootstrap successful businesses instead of raising gobs of cash. We need to elevate products that solve real problems even if they don’t become unicorns. We need to invest in startups reducing greenhouse emissions instead of yet another chatbot, even if the financial rewards are lower.

But mostly, for entrepreneurs, if you don’t need venture capital, don’t take it. The goal is not to raise money at an ever higher valuation but to build a useful product and a successful company. Venture capital is not a scoring system; it’s simply one possible funding mechanism.

In the end, you should define yourself not by how much cash you’ve been able to squeeze out of investors but by how well you’re using your time on this earth and how much good you’re creating.

Is the founder SüprDüpr willing to kill people if that’s what it takes to reach a $1 trillion valuation? Read my Silicon Valley mystery novel, To Kill a Unicorn.