After observing the Tech City Media, one would think that the goal of a startup is to raise finance. Most success stories both here and in the States centre around that theme and for an early stage startup with little traction there are often no other metrics to go on.
However, let’s not get distracted, the ultimate goal of any company is to make profit. Net profit gives spare cash and with money you have choices. You can grow your company, you can take strategic decisions, you can pay back debts you can choose what you want to do.
Don’t forget that all funding and investment is a kind of debt, you not only sell part of your company in exchange for investment, but you also gain shareholders that have performance expectations and may make demands. If your starting your own business, chances are you want to be your own boss, but if you gain investment, your investors are your employers and they will expect to have a say in how you run your company.
So when I read stories that Company XYZ raised $50M investment, I don’t see this as entirely positive. I mostly feel for the founders as they have gained a demanding employer that may inhibit their ability to run the company in the way they want to.