Venture Capital for Software Companies: Does It Fit Your Startup?
Summary
No doubt raising a big fat round of institutional capital is a landmark event in the early life of startup software companies, and definitely makes everyone feel great – at least for the moment. There are a bunch of folks operating around the margins of the venture capital business that are categorized as “seed funds” and number other similar terms, who call themselves VCs and don’t require this kind of potential to invest. So while the discussion in the section above may be sobering to some folks, there are many, many good software businesses out there that are worth starting and running; the vast majority of them just don’t fit this description of a “potential near unicorn”. If you fit the criteria that VCs are screening for, AND you need the money for competitive or good other reasons, then by all means put that pitch deck together and start networking your way into the VC firms. Some of those stupid things I often see in the application of venture capital for software companies are: Before I close, I want to re-emphasize that there are real business cases where venture capital for software businesses makes total sense to raise, as I examined more deeply in the article SaaS Startup: 5 Key Bootstrapping vs. Fundraising Considerations and also in Strategic Fundraising Decisions.