Yesterday I spoke to students at a career conference held by my alma mater, and I was asked the question:
“How would I go about raising
my first round of capital?”
It occurred to me that the students had no idea that they were already on the journey to raise their first round of capital.
Friends, Family and Fools
Your first round of capital is traditionally raised by friends, family, and fools. We call them friends, family, and fools, because they are the people who invest in you based on nothing more than their knowledge of your character, your personality, and your integrity. They don’t invest based on cash flow, revenue, or hard numbers, because you usually haven’t grown to a size where you can show these metrics yet. That’s why some people refer to them as “fools”.
Indicators of Success
But are they really “fools”? All venture investment, at the end of the day, is an investment in people–in a team, in a founder, and in a vision. If you have known someone since they were young, you’d know them better than a lot of people. You’d know if they lie, if they’re flaky, if they have integrity, how they manage conflict, whether they’re creative, traditional, if they are great talkers, or if they’re not great do-ers, and perhaps most importantly, whether they have grit, perseverance, and the will to succeed. You might know what makes them tick, and decide very quickly whether they are someone you believe can become successful.
Importance of Pivoting
Life isn’t economics. You can’t assume all variables will always stay the same. All entrepreneurs would tell you that their product or business model has changed so much since they started. The willingness and ability to recognise and admit where you are wrong is paramount, because you’ll be pivoting and adjusting your business and assumptions thousands of times before you settle on something. Even then, the world changes, and you’ll always have to keep improving.
Your Journey Starts Now
So my message is this: your journey starts now. Regardless of whether you eventually decide to become an entrepreneur or a hired gun, remember that you are making impressions every day. Even as a 16 or 19 year old, you are building your reputation. Are you the type of person who lays back during group projects and waits for other people to do the work? Do you keep your word? When people share a differing opinion with you, do you get defensive and fly into a rage? Do people like to work with you?
Finally, be kind to yourself. We are each a work-in-progress. If you have character flaws, recognise them and work on them. Start by working on yourself, before you build a company with you at its core.