There is a romanticism about starting a business, especially for young and ambitious entrepreneurs. Nobody thinks it is easy or effortless, but I do believe most feel it follows a preordained path described in countless books and videos.
Have a great idea
Grind and grow the business
Land yourself on the next cover of Inc.
Reality alert: It never goes that way -- never. Most entrepreneurs, however, believe this and mistakenly end up stuck in the helpless and harsh realities of step two, the perceived importance of raising money.
If you have built and exited a successful company, you are more likely to convince an equity partner to invest in a new idea. My guess, however, is that if you built and exited a successful company, you do not need money.
The truth is that when it comes to business ideas and startups, if you believe that your company cannot exist without money, then it probably will not exist with it. To explain, consider these must-haves before you set out on a mission to raise money.
I recently watched the Netflix series, Inside Bill's Brain: Decoding Bill Gates, which profiles Gates and his work through the years founding Microsoft. The thing to understand is that Gates did not raise millions of dollars for an idea that would become Microsoft. Instead, he (and Paul Allen) built the code that eventually became Microsoft, slowly developing it over several years. It was only after actually having a "product" to demonstrate that they started a company.
Even today, unless you are an experienced entrepreneur with a long track record of success, it is going to be difficult to raise meaningful money to support an idea. Moreover, I would argue that if you cannot build a prototype of your product or service, you probably do not truly understand it.
What do you do if you have a great idea but lack the capabilities to build it? You surround yourself with people who can. The obvious example of this is Steve Jobs, who as the visionary leader of Apple depended largely on Steve Wazniak to build and test the early products. Jobs was smart and understood what he was building, but he surrounded himself with people more capable of turning his ideas into reality.
The fear many entrepreneurs have about collaborating is that others might steal their idea. Yes, this is a real issue, but your idea is worth nothing if it is sitting inside your head. Instead of looking for money, devote your time to looking for capable co-founders.
Today, startup investors seek traction, plain and simple. Potential investors I know will ask the same two questions: How do you get your first customer? How do you get your thousandth customer? It is much easier to convince an investor that your idea is viable if you already have customers.
At this point, young entrepreneurs will say, "This all sounds great, but how am I supposed to do any of this without any money to start?" or "I can't make this happen without money."
Maybe you are right, but if your Plan A depends on raising money, then you need to have a Plan B, in case you don't get that money. Then, just skip to Plan B.
Entrepreneurship is about figuring things out, and the painful truth is that if you're passionate about and truly believe in an idea, then you will eventually figure out how to get it done -- with or without money.