Startups Don’t Need Money

A historic moment in 1600’s venture capital happened when Columbus went before Queen Isabella and King Ferdinand of Spain and asked them to finance a voyage into the unknown. We don’t know what he said, but we do know the details of the resulting contract. The monarchs agreed to contribute “some of our ships and subjects, to discover and acquire certain islands and mainland,” plus 90% of any profit from trade. Columbus received the right to be Governor General of any lands he discovered, and 10% of profit.

While Columbus’s imperialist actions have been rightly called into question since, he was unarguably a great entrepreneur of his era. The technologies have radically evolved since his day, but the core principles of entrepreneurship are surprisingly similar. He saw an opportunity that was risky to take but had the potential to be very profitable, so he pitched an investor, got the resources he needed, and set out into the unknown. However, let’s note that it wasn’t money that Columbus received, it was a fleet of equipped ships and sailors.

Today, just as then, an entrepreneur has no business asking for money until they understand what they’re sailing towards, and what ships they need. In modern terms, the goal an entrepreneur is setting sail is a profitable business, and their ships are the resources needed to achieve self-sustaining profitability (e.g. marketing, tech development, patents, infrastructure, staff). Money is what we generally use to buy all these things, but it should never be confused with them.

Asking for money without a detailed plan of what it’s for is a mistake that we see many entrepreneurs making. Doing so sets you up for failure.

To jump to another era of entrepreneurship, the Wright Brothers beat out far better financed aviators. They won because they had to be lean and focus on what mattered most, which was truly understanding the equations of lift. As a result, they were the ones who figured out what it takes to fly.

For entrepreneurs then and now, it’s essential to have a clear understanding of what you really need, and it’s not money.

Ready to pitch us? Email your deck to: hello@hyperspace-enterprises.com