Should I raise VC funding for my AI-first startup that has customers and revenue? Like the Y Combinator startups in Silicon Valley that I see?
A startup entrepreneur in the US asked me that question yesterday. So I asked him this:
How much did you spend to build your working vertical AI product for the industry you are from?
$300.
Maybe he meant $300 a month in LLM fees and coding tokens. Either way.
So what do you need funding for?
I don’t know. It seems to be what the winning startup founders do, right?
The question “Should I raise funding?” is as old as startups.
Most founders got it wrong in the cloud and SaaS days. They raised too much and got burned when they didn’t need to.
Big investor checks weren’t needed as much 10 years ago, compared to the pre-cloud days— and big funding decreased the odds of founders winning anything.
Now you can build valuable solutions that actually do work and get things done. Starting at $300.
I explained to this founder that, whether big or small, institutional VC funders only want to invest in rocket-ship companies that grow very fast (5X+ a year, year after year) and sell for a big win someday.
Is that what you’re doing? Building a billion-dollar exit for investors?
Why not build a $3M revenue company that serves your industry and spits out $1M in profits for you every year?
That’s not easy either, but your odds are way better.
Really? I can do that? That would be awesome!
OK. Stop looking at the biggest funding rounds and mega-cap AI companies.
Just create amazing value for the customers you can reach efficiently. And never stop doing that every day.
Awesome, he said, with relief.
I have had this conversation thousands of times with founders of new software startups in the last 10 years.
The fact that startup founders still think about funding like this in the AI agent age is crazy to me.
– You don’t need the funding to build something and start selling.
– Big institutional funding decreases founders’ odds of winning anything.
– Big VCs aren’t funding anything less than 5x or 10X rockets in AI anyway.
– 95% of software company exits are for under $100M.
Just like 10 years ago when the cost of making cloud software went down fast, funding was not required to build founder-scale companies.
The same thing is happening now with AI – 10X cheaper to build, 10X more value for customers when agents do work.
There will be 10X more founder-scale companies that create amazing profits or life-changing exits for the founders.
The practical software revolution is happening again!
