Before raising money, you must ask: is your company a venture business?
Venture capital firms have the unique ability to provide you with resources to allow you to scale, the ability to garner press (every capital raising seems to warrant an article!), insider expertise and mentoring from established individuals in a variety of industries.
However, for many startups, venture capital investment may not be the best choice. At Slader, we’ve found the self-funded route to be optimum. With our focused user-base of high school and college students, the unknowns of tapping into this demographic prove daunting for venture investors. The known tracks of selling to districts, teachers, and parents fit well into the pre-existing paradigm of EdTech companies that have already achieved investment. At Slader, our lack of a subscription model and the fact that we work directly with students and not their parents, teachers, or schools fits into a grey area for investors, but a sweet spot for us as content publishers.
In speaking to a number of VC firms, none convinced us that their expertise and talents would serve us in the area where we needed them most: understanding teenagers and how they relate to their academic experience online. Thanks to a talented CTO, scaling our site was not an issue; thanks to past experience running small businesses, the accounting and legal nuances of starting a company were not a barrier.
Press is always helpful, but when your target audience is teenagers, garnering tech press coverage rarely gets in front of their eyes. Where we needed expertise the most, understanding high schoolers, the mission was ours to accomplish, and something we continue to improve with the help of endless user contact, surveys, chats with teachers, and other mentors who have experience with teenagers online.
But perhaps most importantly, if you don’t need the money from venture capital firms to fuel growth and your company is already able to tap into a pool of business mentors, why pursue outside investment? At Slader, after a long slog with family and friends money, we reached a point in our business where we are cash flow positive with a fast growing user base. The freedom to pursue our business development objectives without external distraction is a huge win.