"The more I find out, the less I know."

Tuesday - September 14, 2004 at 10:17 PM in

A Day on the Show Floor


"We really need a new sign for our booth," I announced. "One which says, 'We Are Not Seeking Financing At This Time.'"
"Don't bother," David, my VP of Development, replied. "The sign would only encourage them."

This was after the third venture capitalist of the morning. Pardon me: one Venture Capitalist, one Private Equity Fund, and one Merchant Bank/VC. The precise distinction between these classes is somewhat beyond me: they all give money to private companies in hopes of making a killing when the companies go public or get acquired.

Nine months ago I would have gladly taken any reasonable term sheet. We had prepared a pitch, and I was floating a few trial balloons. But some advice from wise mentors who had been through a few startups convinced me that I didn't really want outside money ("At your stage, the valuation will stink, and you'll give up a lot of options"). So I didn't really pursue it that hard, and let the idea drop back in March or so.

But today, for some unexplained reason, our booth at the SpeechTEK trade show suddenly became Venture Capital Central. The irony is not lost on me, since nine months ago we didn't know how long we'd still be in business and couldn't have attracted money even if we'd tried. Now that we have a reasonable chance of posting a cash-flow positive month before the end of the year (and an outside chance of posting a cash-flow very positive month before the end of the year), I feel like I'm beating them off with a stick.

I have nothing against VCs in general. Given the choice, I'd rather not take their money (or more to the point, I'd rather not take the strings which come attached), but they play a very important role. I may even become one myself, someday. VCs also tend to be well-connected, and it never hurts to build bridges with people who have lots of money and like to invest it in whizzy new technology (even if the ones you're talking to are at best junior associates).

So I took ten or fifteen minutes with each VC in turn, told our story, how we got our start, and what our market is. Then, I politely said that we're not seeking financing, but please feel free to call me if they ever have any questions. Only one of the three was impolite and superficial enough to bolt as soon as I told him I didn't want his money.

Other than that....this year's show is the biggest ever, and our booth attracted a good sized crowd throughout the day. We had the usual crowd of serious prospects and gawkers and people just looking for a free ballpoint pen. We had a lot of people tell us that they plan to use our services "soon" (I never believe it until the check clears), and we picked up one sizable order--ironically--from a client not at the show. That order will cover just under a month's worth of overhead.

All in all, not a bad day.

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