What Are The Advantages And Disadvantages Of Taking VC Or Angel Money Versus Customer Funded During The Initial Years?

You are who you surround yourself with. Customer-funded is the kiss of death to innovation that knows no precedent, for two main reasons.

1/ Customer-funded yields the false-positive of the “faster horses” theory implied by Henry Ford. Customers were initially incapable of envisioning the kind of innovation that changes the norm. So an affirmation by customer funding is generally evidence of downstream sub-optimization of an existing and established truth, the inverse of upstream innovation that breaks the norm.

The sleight of hand to customer-funding is not an unusual preference of the pageantry of innovation that is now forced to regurgitate its own subpriming by virtue of innovation arbitrage (venture capital) having turned subprime. Most entrepreneurs are now relegated to subprime funding sources, steeped in the conformity of groupthink, exactly the attitude unlikely to spawn the foresight to break the norm.

2/ Full funding runway support for unprecedented upstream innovation from a higher normalization of truth that breaks the norm is unlikely to be provided by the public, and hence at some point of growth, a perfect alignment of rounds and valuations with venture capital must be constructed to reach the stars. Seldom is an initial valuation established by the public an interesting trajectory to create venture-style returns for follow-on venture investors.

On the flip-side, the many downstream optimizations of an existing normalization of truth are perfectly suited to appease the return expectations of the public.

So, to put it more starkly, if you have dated too many hookers, it is unlikely you will ever find the woman of your dreams you should marry. Investors mostly interested in the protection of their downside are incompatible and unlikely to help you achieve an unprecedented upside to reach the stars.

Not a problem if you are not reaching for any stars.

Let’s lead the world by example with new rigors of excellence we first and successfully apply to ourselves.

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