If you’re a startup founder looking to raise money, here’s some insight from Concur CEO Steve Singh: Take as little cash as possible.
“That’s very different from what a venture capitalist might tell you, but that’s my advice,” Singh said. “It forces you to say, ‘How do I get the maximum output I can with the few dollars I have?’”
Singh, speaking at the Northwest Entrepreneur Network’s “Entrepreneur University” this past Friday in Seattle, outlined two benefits to this line of thinking.
“You can keep more of the company to yourself, and on top of that, it forces a certain level of discipline on the business,” he said.
In terms of who you choose to raise money from, Singh said it’s extremely important to pick investors who you actually like as a person.
“I apologize to all the venture capitalists in the room, but all money is not equal,” he said. “When you take money from any VC, it’s not just a million here and a million there. Take it from someone you like the most, someone you could have dinner with and enjoy that time with that person. I guarantee you it will become a very personal relationship. You will make mistakes and do things that weren’t what you expected, and you want to make sure you have long-term support.”
Finally, the Concur chairman also advised startuppers to get to cash flow positive as soon as possible. Singh said your company doesn’t need to be hugely profitable, but should at least get to a minimal level of profitability.
“Not only are there economic benefits to this, but operationally, you can’t mask problems that exist in your business,” he said. “If you mask the problems, eventually they will come back and blow up in your face and you’ll have to deal with them. There’s no getting around dealing with them, and you might as well deal with them sooner.”