What Nobody Tells You When You’re Thinking About Raising Venture Capital
A successful round of fundraising can take your startup to the moon, but do you understand all the costs?
One of my closest friends recently told me he and his wife are expecting their first child. When he shared the news, I did exactly what everyone does: I put on a huge smile and excitedly said “CONGRATULATIONS!” as though I’d just been told the most amazing news in history.
I responded that way because I knew it’s how I was supposed to respond, but it’s not how I actually felt. As the father of two young children myself, here’s how I wanted to respond:

To be clear, I adore my children. But I can adore my children and still feel badly for someone about to have a child of his own, and it’s because I have experience.
The same thing is true for fundraising startups. In my 10 years of advising and teaching entrepreneurs, I’ve had dozens of founders excitedly tell me about closing their first rounds of venture capital. When they do, I always congratulate them, but, in my head, I usually feel like laughing at them. After all, I’ve raised VC, too, which means I have experience, and I know exactly what they’re in for.
An honest founder meeting
I was leaving a coffee shop when I noticed a founder who’d closed a round of funding a few months prior. I didn’t know him as well as some of the other founders I work with, but we were friendly enough that I figured I’d say hi.
“Congrats on the big raise,” I said as I sat down across from him. “Must be exciting times for you and your cofounders.”
“Thanks,” he said as he rolled his eyes. “News travels fast, I guess.”
“Good news does,” I said. “Or rather… I assumed it was good news. You don’t seem very excited for someone who managed to hit a major milestone in your startup career.”
“I guess I don’t feel very excited,” he replied. “This fundraising stuff hasn’t been as great as I thought it’d be. Sure, I have more money, but it feels like everything has gotten 10x more complicated. I’ve got more employees, and they take up most of my time. When I’m not in meetings with them, I’m in meetings with my investors who seem like they constantly want progress updates. If I want to get any work done, I have to do it late at night or super early in the mornings because those are the only times people don’t need something from me. Basically, I work more now than I did before, which is crazy because I thought fundraising was going to make things easier. It hasn’t. This is way harder”
“Welcome to running a venture-backed company,” I laughed. “I can’t say I’m surprised.”
“You aren’t?” he asked. “Then why’d you come over here to congratulate me? Why didn’t anyone warn me that raising venture capital was going to make building my startup so much harder?”
He was right. Even though I’d congratulated him, I wasn’t actually excited for him. Honestly, I felt the same way I felt when my friend told me he was expecting his first child. It wasn’t that I felt badly for the founder. I was genuinely excited for him. But I also knew raising venture capital wasn’t the end of his hard work. It was the beginning.
The problem with congratulating expectant parents
To understand the challenge facing the entrepreneur I was speaking with who was struggling with his newfound capital, let’s take a moment to think back to what happens when people announce they’re pregnant. Personally, I’ve spoken with enough fellow parents to know I’m not the only person who feels disingenuous when I excitedly yell “CONGRATULATIONS!” anytime friends tell me they’re pregnant. This doesn’t mean we don’t love our children. But we know having children is challenging.
I bring this up because the faux enthusiasm parents create for pregnancy creates problems for a completely different cohort of people most of us never consider, which are the people thinking about getting pregnant.
Take a moment to put yourself in the shoes of a young couple without children. You’re blissfully enjoying your marriage and thinking life couldn’t get any better; however, every time some other couple announces they’re expecting a child on Instagram, they’re flooded with hundreds of excited “CONGRATULATIONS!!!!!” comments from other parents.
When you witness all the excitement for someone being pregnant, you begin to doubt your own bliss. You find yourself thinking that maybe your married life isn’t as fulfilling and wonderful as you think. After all, according to everything you’re seeing and hearing, having a child must be the most wonderful, joyous, easiest, blessed experience in history. Maybe you need that, too?
The problem with congratulating funded founders
Just like young couples see the pregnancy announcements for all their friends on Instagram and get jealous, young entrepreneurs working on new startups see all the fundraising announcements for other founders and get jealous, too. When founders who raise millions in venture capital get all sorts of praise and adoration, it must mean raising venture capital is a wonderful thing, right?
To be clear, raising VC can be wonderful, but let’s be careful not to confuse value and effort.
Just like having a child can be wonderfully rewarding while simultaneously requiring enormous amounts of work, raising venture capital doesn’t teleport people into a magical entrepreneurial land of infinite bliss, which is exactly what the founder I was chatting with at the coffee shop was saying when he was complaining that raising capital was making his job harder.
Most founders assume having a bank account with lots of zeros means building a company will be easier, but that’s not what happens when you get investors. When you get investors, it means you have to start scaling your company, and scaling a company is a completely different kind of work than starting a company.
Scaling a company requires things like hiring people, firing people, and managing them. It also requires building better infrastructure that others can use and be successful with. It requires finding more customers faster than ever before, it requires reporting to more people than ever before, and it requires having more responsibility than ever before. In short, scaling a company is lots of work. Sure, it can be fun and rewarding work, but that doesn’t mean it won’t be difficult.
Experienced entrepreneurs know this in the same way experienced parents know the challenges of raising children. And just like parents excitedly congratulating expectant parents might confuse people thinking about having children, when entrepreneurs who’ve raised capital excitedly congratulate other entrepreneurs for raising capital, it confuses bootstrapped entrepreneurs into thinking they should fundraise.
If you’re one of those bootstrapped entrepreneurs, please understand that fundraising isn’t a necessity for startups. More importantly, raising capital doesn’t inherently make building a startup easier. I’m not telling you this because you shouldn’t raise capital. I’m just telling you this because you should know what you’re getting yourself into. Yes, getting funded can be rewarding, but rewarding doesn’t mean easy or enjoyable. In reality, the most rewarding things in life are often the most difficult. That’s as true in startups as it is in parenthood.