How VC Funded Founders Have to Listen to Their Investors More Than Their Customers

When you raise big VC funding, the chances increase that you will listen to your investors about what product to build and what business template to follow.

When you DON’T have big outside funding, the chances increase that you will listen to your best customers to create your software products.

Ironically, when you have big outside investors, there is usually less “freedom” to create the company you want.

Software entrepreneur Shameem C Hameed and his team built a global digital health enterprise platform at ZH Healthcare.

ZH Healthcare, Inc. started as a billing services company for physicians offices in the US, but they quickly began building a better software product for their customers that cost ten times less than other solutions.

They kept finding big customers not served well by the existing EHR and digital health solutions.

And they kept building what those customers needed: a low-code, no-code customizable platform that served all their needs at the core of their business.

After the company had grown substantially, Shameem talked to VC investors about raising growth funding.

But potential investors had different ideas about the strategy of their products and services, as Shameem describes on the Practical Founders Podcast this week:

“I looked at funding a few years ago and talked to some investors. The first investors told us that the EHR market is saturated for small offices and there’s not much you can do there. At first, I found myself “cutting my feet to fit the shoe” of what VCs wanted to hear.

“We told them we are building a customizable enterprise application using low code and no code for organizations with 50+ users who can see the value in what we are doing. And our customers already loved it. That’s what we are. That’s my vision and I’m going to stay there as long as it gets done.

“They wanted a five-year exit plan, and that wasn’t going to happen. I’m building a big, long-term company. At the slightest problem, these investors will say, ‘Let’s have an orderly shutdown.’ If we raise capital, we can’t persevere and make it work like we have always done.

“So finally I told my people, it’s not going to happen. We’ll keep going without VC funding. We were already profitable and growing since day one. I have the patience to build the company in the way that I want it.”

By growing a profitable software business with happy, long-term customers, Shameem didn’t have to raise any VC funding if it wasn’t a good fit.

He kept his precious ability to grow the company and serve the customers he wanted with the products they wanted.

If you follow the trail that works for you and your customers, there are many ways to create a valuable software company.

Listen to the interview with Shameem here on the Practical Founders Podcast.


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