Lifestyle-funding fit for first-time entrepreneurs

5 min readDec 19, 2020

Venture funding is sexy. You get featured on the press and is an endorsement literally worth millions of dollars that you will become a billion-dollar business. One problem is that it deludes some entrepreneurs into thinking that venture funding is the best for their companies. Venture funding is not for most entrepreneurs. It is just 15% of the private capital market (McKinsey).

VCs like to talk about the right ‘fit’. We have a lot of them. Product-market fit. Founder-problem fit. Value-business model fit. Here’s another one: entrepreneur lifestyle-funding fit.

It means matching the type of life you want to live to the type of funding you want to for your business. And it is inextricably linked to the business you are building. Elizabeth Yin of Hustle Fund has a great article on business-funding fit (here). And this article extends it to lifestyle-business-funding fit. (Yes, VCs love fits.)

But before we dive in, who is this article for? It is for entrepreneurs who are raising capital for the first time. And at this stage, there are two types of business. Oversimplifying, of course.

Mom-and-pop. I intentionally chose this expression because I will be using my parents as an example.
Venture scale

What differentiates these are two are the scale and pace. How big do you want it to be and how fast do you want to get there. Mom-and-pops: smaller scale at moderate pace. Venture: large scale at rocketship pace.

Mom-and-pop

My mom and dad started a restaurant (if you live in the Philippines, check out Eat Fresh Hong Kong Street Food), not only because my mom is good at cooking (ha, founder-business fit), but also to provide for the family — to put food on the table and pay for my school expenses. My younger brother is still in school and they continue to run the business with the same goal.

How fast did my parents want to grow the business to be profitable enough to pay the bills? As soon as possible. A hungry stomach does not wait. But there is less pressure than a venture scale business to return capital. We raised funding from friends and family who were not rushing to get their money back. Later, we borrowed from bankers who were okay with the business not growing as long as we pay the amortization.

My parents wanted to spend more time with me and my siblings, watching TV, and hanging out with friends. That is the lifestyle they want. A steady income that pays for the bills gets them there. Same income as last year? Good. 5% growth? Amazing.

Venture scale

Contrast this to a venture scale business whose goal is to be a billion-dollar business as soon as possible. This means working your ass off to grow 100–300% each year for the next several years. 100+ hour weeks and sleepless days. This does not mean you are not happy working but what it does mean is that you have less time for other stuff. Here is what Frederic Kerrest, co-founder of Okta, wrote on understanding sacrifices before launching a startup (HBR):

For me, weekend trips became a thing of the past after starting our company Okta…But the needs of my company became the top priority during these vacations, and I spent the entire weekend of our trip in 2010 in the hotel room closing our first round of funding… I missed the 2011 ski trip entirely due to business, and I’ve missed four close friends’ weddings in foreign countries since founding Okta… At the time, there was no question about whether or not I would miss the weddings, or whether or not I would spend my ski trip indoors. Like a baby, our business’s needs come first. Internalizing these decisions was part of building our company and making sure it became successful. If that meant changing my mindset to reorient it toward our business, then that was what I was going to do.

This is the type of founders that VCs like to fund. This does not mean that VCs want you to sacrifice everything for the business. And please, do not sacrifice your health and happiness. VCs will support you to get more growth because this is how the venture model works. They will introduce you to customers and get on a 2AM call to talk about job descriptions for that first junior marketing hire.

Final thoughts

If you are a first-time entrepreneur, it helps to think about what kind of lifestyle you want when raising capital. Starting any business is tough and having support from the right investors is important.

View are my own. Also at kenn.io :)

Lifestyle-funding fit for first-time entrepreneurs

Written by Manley Darren