Celebrate making money not just raising it
The other day I was looking through my Twitter timeline when I spotted a tweet that really got me thinking.
It was from Sean Brown, who is the founder and CEO of fast-growing Manchester-based eCommerce platform Mercarto, who isn’t known for making controversial statements.
Why is raising money as a startup more celebrated that making money?— Sean Brown (@seanbrownsy) August 10, 2019
I know it happens worldwide, but it's beginning to become a little tiring in Manchester.
As a member of the media I’m probably as guilty as anyone of covering such stories so I put it to the test by looking at some recent BusinessCloud newsletters and the following headlines jumped out from the page.
- Car charging firm secures £1.7m government funding
- Record-breaking $55m funding row for AI software
- AI start-up raises £2.4m in funding
- Career management software raises $60m
- FinTech start-up Hokodo awarded €2m
BusinessCloud isn’t alone in reporting funding stories but, if I’m honest, when I thought about it I meet far more entrepreneurs who talk about raising money than actually making it.
Below is an exchange I had with one very prominent North West entrepreneur, who has been involved in several raises.
Me: “Are you making any money yet?"
Entrepreneur: "It’s not about making money, it’s about data."
Of course it’s not unusual for tech companies not to make any money but still have a whopping valuation.
Twitter had to wait until the final quarter of 2017 to post any sort of profit while Uber has admitted it may never be in the black.
The tech sector famously ‘burns’ (a phrase I hate!) a lot of money and there’s no doubt that investment unlocks growth.
“I sometimes roll my eyes when I see yet another story about a company raising a couple of million pounds and being tipped as the 'next unicorn',” admits Sean Brown.
“I’ve got absolutely nothing against companies raising money but too many entrepreneurs spend their time chasing investors rather than chasing customers. It’s about priorities.”
Mercarto’s recent press release about achieving seven-figure revenues in its first year of trading wasn’t widely reported but Brown insists that wasn’t the reason for the tweet.
The 29-year-old says he feels more pressure spending an investor’s money rather than his own.
Mercarto, which allows businesses to set up an eCommerce store in minutes, is backed by UKFast CEO Lawrence Jones MBE, who I launched BusinessCloud with in 2016.
Brown said: “Raising money isn’t the end game but rather one step in a long journey. It’s not ‘free money’. I bootstrapped Mercarto at the start and invested my own money before Lawrence got involved.
“We’ve driven Mercarto’s first-year revenues via a series of multi-million-pound contracts and have very ambitious plans to grow further.
“The marketplace is changing all the time but as entrepreneurs we have to be careful what language we use when it comes to raising money because the acid test is whether you actually make it.”
- Chris Maguire is Executive Editor of BusinessCloud and can be contacted on Twitter @editor_maguire or LinkedIn.