An open letter to an early stage startup thinking about investment

Below is an email I sent to an early stage startup asking for my thoughts on investment; specifically, should they raise money, and if so, how much; I thought it might be interesting for others so I’m sharing it here:

Hi X,

No probs. The key to any successful business is having a great product. Great products beget users & investment, not the other way round.

Raising investment is the biggest possible distraction to starting/running a business. Unless you’ve got real traction i.e., impressive growth numbers (50%+ month-on-month) then I wouldn’t try to raise money: A) It will be really hard, and probably end up being a waste of time; B) You don’t yet know if it’s worth you committing the next 18 months of your life to the project.

If/when you raise money you should raise enough for 18 months runway. No-one worth taking money from will give you more, and given you’ll have to start raising 3-6 months before your money is due to run out, raising less means you’ll be back raising again in 6 months which is not recommended.

I hope that helps. Best of luck!

Matt