OnStartups

Why Raising VC Funding Does Not Equal Success

Posted by Dharmesh Shah on May 20, 2008 in venture capital 18 Comments

My startup, HubSpot (which provides online marketing for small business) recently released the news that it has closed a Series B round of VC funding of $12 million, bringing our total capital raised to over $17 million. In response to this news, I received many messages from friends and colleagues congratulating me on my success. To all of those well-wishers, thanks! It is indeed an exciting time and I'm thrilled to have hit this milestone.

However...

Raising VC Funding <> Success

Getting a round of funding from venture capitalists is not really "success". Sure, it provides resources to build a great company, but it's not success. Sure, it demonstrates that some really smart people think the opportunity is big enough to invest money in it, but it's not success. Sure, it provides some credibility that will help recruit employees, get customers and sign-up partners -- but it's not success.

VC Funding = an opportunity to create success

Success is different for different startups. For HubSpot, success is building a real, sustainable and significant business that has lots of delighted customers. For others, it might mean being bought by Google/Microsoft/whoever someday. Regardless of what you think of as success, it's unlikely that simply getting some outside funding qualifies. It's just a step down the path -- and even then, it's not the only path.

Having said all that, it's great to have received the vote of confidence from some super-smart people (our investors) and the cash in the bank is nice too. [smile].

Now that this milestone has passed, it is time to get back to (real) work. For me, that means increasing TDC (Total Delighted Customers). Right now, TC (Total Customers) = 401 and I'm not foolish enough to believe that TDC = TC.

Hopefully, we'll make all the folks that have believed in HubSpot (customers, employees, investors) look brilliant. In fact, that's not a bad definition for success.

Success = Make Those That Believed In You Look Brilliant

Cheers.