If I had a pound for every time I’ve heard the founder of a creative or digital business imply that all their problems would vanish if only someone would see fit to throw a few hundred grand or the odd million their way…well, I’d probably have enough money to invest in one.
I used to take this stuff seriously and wonder if the problem was me; maybe if I had an MBA, if I hung out with investment bankers more, if I’d followed up with that guy from Schroeder’s I met in 1989.
Then, after I’d heard this broken-record lament enough times, I realised a couple of fundamental truths. Firstly, the vast majority of creative and digital businesses are inherently un-investable. They just don’t meet even the most basic criteria that would satisfy a VC or investment bank/fund. They would struggle to convince an angel investor or angel network. Which pretty much brings it down to a rich aunt with a passion for cutting-edge animation or online media analytics – and there aren’t too many of those around.
Not every early-stage company is a ‘start-up’.
The second thing that gradually dawned on me was that these wishful entrepreneurs were talking a kind of code. When they talked about ‘investment’ or ‘funding’ what they actually meant was ‘growth’. They passionately desired to grow their businesses, but they had made an a priori assumption that growth was only possible on receipt of a large ingestion of cash. So the conversation instantly became all about ‘Where do we find the money?’.
Given that inherent un-investability, this was always going to be – for the vast majority – a hiding to nothing. Worse that that, it constitutes a massive distraction from the real business of growth, a heavy drain on senior management time and strategic thinking capacity.
For first-time entrepreneurs, especially those who find their business stuck in a stage of development that is exhausting and unrewarding, it’s a seductive thought that you’re swimming with the sharks, hunting down that elusive half-a-mill that would make it all better. As a legion of business-lite authors know only too well, this is lucrative territory, the promise of overnight transformation.
The truth is far more prosaic, and it’s not out there. It’s right here, in the guts of your business, in the commercial and operational workings of the stuff you do to make a living. Paradoxically, most of these businesses already contain the means to grow into the next stage; the very inefficiencies that hold them back are themselves the key to breaking out and moving on.
It’s not about the money – or at least not in the way you thought it was.