The Fundraising Obsession
“Thrilled to announce we’ve raised $10M…”, “We’re happy to announce that…”
These are the kinds of headlines you constantly see on X and LinkedIn. Tech blogs jump on the news, timelines light up, and suddenly the start-ups that have raised money become the ones everyone is talking about.
For a while now, the most common measure of success for start-ups has been the amount of money raised. There’s an unspoken competition around who raised the biggest round and how that translates into relevance, credibility, or even superiority.
Before critiquing this culture, it is important to acknowledge why fundraising matters in the first place. Context helps keep the conversation honest.
Why Fundraising Exists
Fundamentally, fundraising serves five critical functions. It bridges the “Valley of Death” for survival, covers heavy upfront capital expenditures, and funds the research needed for innovation. It also provides the working capital to fulfill orders before customers pay, and perhaps most importantly, it buys speed.
For most start-ups, this capital is essential in the early stages. It pays for rent, developers, servers, and the unglamorous costs of simply staying alive. Think of it like an oxygen tank you wear while diving; it’s just enough to keep you breathing until you reach the surface of profitability.
In other cases, raising money is a strategic weapon. A well-funded competitor can copy an idea and dominate the market before a slower company has time to react. In this context, cash isn’t just survival; it is leverage.
So, if money is effectively fuel, a resource to buy time and speed, why do we treat the act of securing it as the finish line? Why is the size of the raise celebrated more than the mileage it delivers?
The Toxic Psychology
The answer lies in the psychological traps that fundraising creates.
The first is ego validation. When founders receive financial backing, it impacts their sense of self-worth. The logic is seductive: Smart people with money believe in us, so we must be winning. This external validation is powerful, but it is also dangerous. When validation replaces evidence, founders stop asking, “Are customers paying?” and start resting on the assurance that “Investors believe in us.”
Fundraising also distorts perception inside the company. Big announcements make hiring easier and create an illusion of stability. Employees feel safer joining well-funded start-ups than ones quietly growing through revenue. But when stability is built on optics rather than fundamentals, it is fragile. When the money runs low, morale often collapses just as quickly as it rose.
Finally, raising money creates a false psychological cushion. Founders feel they have time. Decisions feel less urgent. Hard trade-offs get postponed. But that safety is temporary. Every round comes with expectations, timelines, and pressure. The runway is real, but so is the clock.
A Note on Intent
To be clear, fundraising is often necessary. But we need to shift our focus from the act of raising to what the funding enables.
Conclusion: Fuel Is Not Progress
Fundraising fills the tank. It does not guarantee direction, discipline, or distance travelled. A company can be fully fuelled and still stalled, lost, or headed in the wrong direction.
Ultimately, this isn’t just a critique of the ecosystem; it is a note to self.
As I continue my own entrepreneurial journey, I am wary of the allure of the headline. It is easy to crave the validation that comes with a check, but I have to constantly remind myself that the goal isn't to be good at raising money; it is to be good at building a business.
Money is a tool, not a trophy. Until we start measuring start-ups by the problems they solve, the customers they serve, and the value they create, rather than just the capital they raise, we will keep mistaking gas in the tank for progress on the road.