The Top 3 Reasons why Raising Your First $1 Million is Difficult

People think that once you raise funding for your business, that everything gets so much easier with money. That is the furthest from the truth and here are three reasons why:

1. Once investors fund your company, you will have to produce big results.

2. You will have a lot more responsibility and will need to put in a lot of work hours.

3. You will now have to manage your team and offer salaries, benefits, and incentives.

If you thought running a tech startup by bootstrapping was difficult, imagine having to actually run a fully funded business with a lot more legalities as well as financial responsibility. For the first point, once you get a group of investors to put up some cash for your startup, you will have to give them monthly reports of both your finances as well as your progress. If your numbers are high they will want to know what it is that is working. You will have to hold Board of Directors meetings regularly to go over any strategies or tactics that are working and how to make them work even better. If your results are the opposite, you will have to show reports once again and in your meetings the topic(s) of discussion will be on how to things work better.

The burden of investors on your shoulders will weigh you down, but if you can produce fantastic results, they will be very happy with you and will most likely fund a second round for you. As for the second point, maybe you are already putting in 12 to 16 hours a day, seven days a week to make your company soar. But once you raise capital, you need to put in even more time and energy because the quicker you can make your company succeed the quicker you will be able to finally take a little bit of time off. You will have to make sure that every aspect of the business is running smoothly, whether it is technology, marketing, user acquisition, financials, or the overall business.

One of the biggest myths of a tech startup is that once it is funded the founders and employees start going to parties, going on trips, and having lavish dinners. In order to succeed, that is the complete opposite of what you should be doing. Continuing to use a minimalistic approach will not only allow you to maximize your funding, but it will allow you to also over exceed the expectations that you will have.

Finally, the third point, managing a team as well as the business. Now you have people that depend on you, and their paychecks rely on your ability to run the company successfully as well as raising subsequent rounds. The only way to do this is to follow the first two points I’ve made and make sure that your team is happy with their salary, perks, stock options, incentives, and environment. A happy team is a happy company. Make sure you host events for your team whether private parties or fun get-togethers, or just bring lunch to work for everybody one day. Even organize a retreat to play sports or a day at the beach every once in a while to get out of the office and clear your head(s).

Overall, when you finally receive funding for your startup, that’s when things really get interesting and you will either succeed to the point of being revenue positive, or potentially an acquisition by a larger player in your space. Your goal as the founder of the company is to take the investment that you receive and make your company excel at every possible twist and turn to get to that final destination.



Jason Sherman

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