It is an exciting time for early stage technology company building and venture capital. Despite some early bumps in Facebook’s recent IPO (my thoughts here), we are seeing something of a return in the IPO market, as Facebook, LinkedIn, Groupon, Zynga, Jive and others have gone out. On the company formation side, founder momentum seems to be surging. Every week, I learn about about new incubators and startup accelerators getting formed.
Applications are surging to top tier incubators Y Combinator, 500Startups, and TechStars. To be sure, it is an exciting time.
And in this industry, whenever the times are exciting, the storylines and hype cycles start spinning up the siren song that startups are easy. If all one did was read top tech blogs, you might think that financings materialized out of nowhere, that valuations were getting bid to crazy levels. And certainly, for some very small number of exceptionally exciting companies, fund-raising happens in a snap. But it’s not the standard. The problem with this siren song is simple. It makes raising money, much less building a company out of nothing, sound easy.
That’s ridonculous. No matter how robust the current market might be, for the vast majority of early stage companies the core reality is that raising money is hard, if not extremely hard. And no matter how hard the fund-raising function is, it pales in comparison to the task of actually building a lasting, impactful company.