Should early-stage startups prioritize building a working product over raising initial venture rounds?

Question

Accepted Answer

Hi,

Firstly, I apologize that it has taken me this long to get back to you ... what threw me was the "your response" comment, since our system didn't show that I had ever responded to you specifically - and it took me a while to figure out what was going on. We are in the process of fixing that, so although I know it was a bit painful, this was just another way you're helping build the product. So thanks.

As to your question: Your instinct doesn't just resonate with me—I'm completely in agreement with it.

Unfrotunately, in this day of Shark Tank and "pitch competitions", founders have come to think that fundraising is the goal. It’s not. Reed and I raised $2mm for Netflix on a PowerPoint deck, but those days are long gone. Investors don't care about slides anymore; they want to see what you've actually learned, proven, and/or accomplished.

So walking into a seed round with a working product and real beta traction is a massive advantage. You aren't selling a dream anymore; you're selling evidence.

My only caution: don't jump stages. Keep that bridge round as small as humanly possible, and I would still suggest doing the pre-seed after that. At each inflection point - where you've proven something that was previously an open question - only raise what you absolutely need to get to that next proof point.

The obvious reason for this is that every dollar you take early on is expensive dilution. But the more dangerous trap is that by raising money before you know exactly what you're building just accelerates your progress in what is potentially the wrong direction.

This is all a long way of saying I'm entirely supportive of your plan. You’ve got the advisors and the timeline. Now do the bridge, use it to get something that actually demonstrates you're premise, and walk into that next round - whatever you may call it - with prove that your idea actually works.

I know that today is building today, so good luck!