Last week I made a pitch to a VC about funding for Ventures. It was quite interesting, in so far, as the VC didn’t really care about what we have done so far (infrastructure, etc.) but about getting traction (sales, market segment, etc.).
From what I saw, the VC’s want to come in when the business is proven, its making money (maybe not profitable, but making money) – and needs additional capital to expand.
For us, in Ventures, I think this will eliminate the VC’s for us, since based on what we see, once we are up and going, we will be cash flow positive in quite a short time. We could potentially expand faster with VC’s – but realistically what I wanted to do is to share the risk of getting to the place where we are ‘running’ – NOT brining someone onboard when we already get traction.
So, from this point of view, VC’s don’t form a great partner for early stages of a venture. With this in mind, what I see is that I need relatively small amount (6 figures) to get traction. And once I have traction, I think if I need expansion capital, the VC’s will be interested and if I am interested, it will be a matter of finding a right VC to come along for the ride.
Having said this, I made some moves in the ability to self fund RedStores Ventures. I will share that later, but for now basically I have such strong belief in what we are doing that I’m willing to take on a lot of risk to get it there.