Finance

'Funded' Doesn't Necessarily Mean 'Validated'

'Funded' Doesn't Necessarily Mean 'Validated'
Image credit: Shutterstock
Guest Writer
Co-founder and CEO of Fundable.com
3 min read
Opinions expressed by Entrepreneur contributors are their own.

If you spend enough time in startup circles, you may fall into the trap of believing that your ideas bear no value without an investor attached. And while investors may find pride in that thought paradigm, you certainly shouldn't.

Investors can support ideas with capital, but they aren't the end game. They are a tool in the equation, not its result. If you're hearing "no" on a regular basis and are becoming increasingly frustrated that your idea isn’t getting the attention it deserves, consider that you may be seeking validation in the wrong places.

Consider the source. Investors are rarely experts in the subject areas in which they’re spending -- though their checkbooks may sometimes lead you to believe that they have more insight than they actually do. In many cases, they are making a go/no-go decision based on a short introduction email.

Related: Young Female Entrepreneurs' Advice on Securing Funding

Maybe the investor is too busy to talk to you. Maybe they don't really understand your space. Maybe they are over-committed on capital. Maybe it's all of the above. Do you really want to use the 10 minutes they spent thinking about your offer as a barometer for the value of your company? I hope not.

History is a lesson. If you want a history lesson on how frequently -- and painfully -- investors miss out on great ideas, look no further than Bessemer Venture Partners, who brilliantly published their “anti-portfolio.” Instead of merely pounding their chests in achievement, Bessemer published a list of how often they've missed out on some of the most successful companies in the world, including Apple, FedEx and eBay -- ouch!

If a great venture capitalist like Bessemer can miss as often as they have -- and on some of the most brilliant entrepreneurs and startups in history -- imagine how easy it might be for investors to miss out on your idea.

Related: Sofia Vergara's Fiancé Nick Loeb Launches Equity Crowdfunding Campaign for Condiments Company

Look to your customers. Only one person can validate your idea: the consumer. Anybody else, including investors, is merely hypothesizing about the value of your product. Your consumer already knows whether your idea is great or not, and that's why they are either engaging with you or ignoring you.

Keep in mind that if you're raising capital to build or launch your product, that's not the only way to engage consumers. They can be surveyed, interviewed, lined up and, in some cases, pre-sold.  If you're not gaining traction early on, raising capital probably isn't the best use of your time anyway.

While investor capital is often an important ingredient in getting a business started, customer attention is what the real end game is all about.

Related: Successful Crowdfunding Is About More Than Money

More from Entrepreneur

Grow Your Business at Entrepreneur LIVE! Join us on Nov. 16 in Brooklyn, NY, to learn from legends like Danica Patrick and Maria Sharapova, pitch our editors, meet with investors, and potentially walk away with funding!
Register here

One-on-one online sessions with our experts can help you start a business, grow your business, build your brand, fundraise and more.
Book Your Session

Whether you are launching or growing a business, we have all the business tools you need to take your business to the next level, in one place.
Enroll Now

Latest on Entrepreneur

My Queue

There are no Videos in your queue.

Click on the Add to next to any video to save to your queue.

There are no Articles in your queue.

Click on the Add to next to any article to save to your queue.

There are no Podcasts in your queue.

Click on the Add to next to any podcast episode to save to your queue.

You're not following any authors.

Click the Follow button on any author page to keep up with the latest content from your favorite authors.