Venture capital has come to define Silicon Valley and tech startups. Founders compete to see who can build the next unicorn with a stratospheric market cap. In fact, for many founders, it's become the only way to build a startup: Hatch a big idea. Raise funds. Burn money growing. Rinse and repeat.
For some startups, this process leads to valuations that would be impossible to reach any other way. But for many others, this fixation has cratered businesses and caused endless stress.
The pressure to become a unicorn led one founder to make decisions he regrets to this day—like turning down a $25M acquisition offer that could have been life-changing. His journey taught him an alternative way to startup success that sidesteps the downfalls of the prevailing VC narrative.
"99% of the guests who are invited onto 99% of the shows, who write 99% of the books about startup land, they are all gonna tell you the opposite of what I do and I think it's bad advice."
The numbers don't bear it out. It's like saying, "here's how I won the lottery and you can too."
The Rollercoaster Ride Through Startup Land
Consider this story: A founder starts a marketing company, goes deep into debt, and winds up starting a blog that becomes a hugely successful SEO platform. After raising Series A and B funding, they found success that exceeded expectations.
By 2011, the company was doubling in size year over year, on track to make $10M. That's when a major player offered $25M for the company.
The $25M Mistake
The offer was roughly 2.5X the company's yearly revenue. But set on the trajectory of "go big or go home," the founder thought $40M (roughly 4X) was more in line.
He left himself no room to negotiate down and said no to the deal—a decision he regrets to this day.
For three more years, he was happy with his choice and the company's growth. But then it plateaued. Soon he stepped down from his CEO role, leaving the company soon after. Later that year, investment bankers sold the company—for far less than that original offer.
Today, that founder runs a new startup focused on profit and serving employees and customers first, then investors. To help change the growth-before-everything narrative, he's open-sourced his funding documents to help founders raise money better.
Secret #1: Unicorns Are for Investors, Not Founders
Building a unicorn startup is the dream of most founders. You put your life on pause, sacrificing relationships, social life, and sleep in the hopes of becoming the next Google.
In fact, a $1B valuation has almost gravitational weight in the startup world today. If you don't chase unicorn growth, many will deride your startup as a "lifestyle business."
The Truth About Unicorn Obsession
Hyperfocusing on becoming a unicorn is not an intrinsic part of startup culture. It's the goal of VCs.
"If you're a venture capital firm, you have hundreds of millions of dollars under management and you need to beat market rate of returns. So you've got to get, you know, whatever your 12% compound annual growth to do that. If you're a VC, you're almost certainly going to need a few companies that are worth billions of dollars in unicorns and exit for a huge amount."
While this hustle to become the next unicorn has become the norm, when you take a second to look around, you can see plenty of successful startups that didn't take the traditional raise-and-burn route.
For Money or Love?
For many founders, the real joy of building a startup is to create something new and serve customers well.
"I love being able to serve customers instead of potential acquirers. It is so freeing to just worry about how do I make my product better, how do I serve people better?"
That is really fulfilling. Founders get into this business because they love serving customers. There's something in the world that doesn't exist today and they want to make that thing exist.
VCs need unicorn startups, but startups don't need VCs.
Secret #2: VC Math Is the Startup Lottery
VCs need unicorns to make their math work. To capture those white whales, VCs place bets on one hundred companies—most of which will fail.
VC Math Reality
75%+
Investments written off
24%
Modest returns
1%
Become unicorns
For every 100 VC investments, they're OK writing off 75+ because 1 will become a unicorn.
This pressure to make the VCs' math work makes it difficult for founders to have a realistic goal because a good company is not enough for VCs. The only thing that moves the needle is their unicorn. So founders are often told to dream bigger, to think broader. To take their dream and 10X it.
"The Problem Is All of Us Believe We're the Special One"
"We're the unique one. We're the one that's going to stand out and we have to believe that so that we can pitch investors on why they should believe in us and trust us with their money."
So instead of creating a business that makes sense below a $1B valuation, founders pitch their ideas to VCs who will only invest when the company has the potential, leadership, and grow-at-all-costs plan to become a unicorn. Even if that's not what the founder wants.
"Many, many founders in my experience want to build long-term profitable businesses. They think they might be worth tens of millions or hundreds of millions of dollars someday. But trying to maximize that growth rate and blow out the metrics to convince the next round of investors is exactly what kills them."
Trusting in VC math and shooting to become a unicorn or bust is like betting your future on a lottery ticket.
Secret #3: Profit Creates Stability, Which Helps You Make Better Decisions
Chaos is part of the startup mantra—move fast and break things. Many founders seem to thrive in this environment, shuttling from crisis to funding to massive growth and back again. We call it a "fast-paced" environment and brag about it in recruitment ads.
But just like the idea of unicorns, this constant push for growth at all costs—whether that's mental health, relationships, or debt—isn't a natural part of a startup. It's caused by pressure from VCs' need for unicorns.
Desperation = Bad Decisions
"When you feel those moments of desperation, that's when you make your worst decisions."
The alternative focuses on building a profitable, long-lasting business. Because that profit gives founders the space to make better decisions.
The Power of Financial Security
"I don't think a lot of people realize how massively having secure finances changes your decision-making for the better. It makes you more calm and thoughtful and you don't feel panicked."
Profit gives you space to make better decisions and leverage to stay in control of your startup.
This is why we work with Node.js developers and other specialists who can help startups build efficiently from day one—without burning through runway.
Secret #4: There Is Success Outside the Narrow Confines of Short-Term Growth
Another consequence of VC math is that all success is not equal in startup land. Profit, for example, is not valued as highly as growth. That means a high churn rate is poison, even if those clients that leave often come back.
Because when you're dealing with funding rounds and VCs, you often don't have the opportunity to look at the big picture. Instead, your vision is chopped up into funding rounds, which means you need short-term wins to sell investors.
The Dark Patterns VCs Encourage:
"All these dark patterns that companies are encouraged to use because founders need to raise money and the venture investors want you to do things."
This narrow definition of success continues beyond funding rounds to M&A. You're building a company and a life. VCs are building a portfolio.
Secret #5: It's OK to Sell Early
The idea of building a unicorn feeds the ego. For many founders, it means you won the game. Meanwhile, selling before that unicorn valuation can feel like a loss. You built this business, grew with it, and if it's your first, you may even feel like it defines you.
And so, you hold on because it feels so valuable to you (it's a bias known as the endowment effect).
"I Had a Ton of Fear That This Was My Only Good Idea"
"It was the only company I could ever build. So I wanted to hold onto it."
So he let a great acquisition offer go. Looking back, he still regrets it—not because the stocks could have inflated the purchase price well above what the company was eventually sold for ten years later, but because he missed a chance to change people's lives for the better.
"That Money Would Have Been Transformative"
"That money would have been transformative for not just myself but a lot of people in my family, my team, and world."
And, as he found out with his new businesses, there is still life after your first startup.
"Life is long. You get to start lots of companies. You can do this many times."
$1B is not a magical number. Accepting even $1M and starting again can be just as life-changing.
You Don't Need to Be a Unicorn
Some startup founders are lucky. They can start their company without investors and grow it slowly to find stable success. But most founders aren't so lucky. They'll need different levels of investment to bring an MVP to market.
The problem isn't how your startup is funded. The problem comes when you allow your culture to be dictated solely by the needs of investors, instead of the needs of your employees, your customers, yourself, and then your investors.
While some founders are forced to cede control during funding rounds, many are still chasing the VC's dream because that's the way they think it's done.
"The Dirty Secret"
"I think the dirty secret is you don't have to do it. Most venture investments, the investors cannot force you to take those kinds of actions. We all do it because we're culturally ingrained with that mentality. But you can get off that treadmill."
You can raise your first round of venture. And then build your business to be profitable and survive for a long time to see where the business can take you.
You are the founder. Build your business your way.
Whether you're bootstrapping or well-funded, having the right development talent makes all the difference. Focus on building great products, not just metrics for the next funding round.
Frequently Asked Questions
Why do VCs push for unicorn valuations?
VCs have hundreds of millions of dollars under management and need to beat market rates of return (typically 12%+ compound annual growth). Their math only works if they have a few companies worth billions. For every 100 investments, they expect to write off 75%+, knowing just 1% will become unicorns. This pressure gets passed to founders who are told to dream bigger even when a smaller, profitable business would serve them better.
Can you build a successful startup without VC funding?
Absolutely. Mailchimp never took VC money and sold for $12B. GoPro bootstrapped to IPO. GitHub only raised money when already profitable. The key is prioritizing profit and customer satisfaction over growth metrics. Some founders use angel investors instead of VCs, or raise one round then become profitable. The problem isn't funding source—it's letting investor needs dictate your culture instead of employee, customer, and your own needs.
Why does financial stability lead to better startup decisions?
Secure finances change decision-making dramatically. When you're not desperate for the next funding round, you're more calm and thoughtful. You can focus on serving customers instead of potential acquirers. You avoid dark patterns like making products hard to quit just to reduce churn metrics. Profit gives you leverage to stay in control and the space to make decisions based on what's right, not what's urgent.
When should a founder consider selling their startup early?
Consider selling when an offer would be transformative for you, your team, and your family—even if it's not a unicorn valuation. The endowment effect makes us overvalue what we've built. But life is long; you can start multiple companies. Many founders regret holding out for bigger offers that never came. Even $1M and the freedom to start again can be more life-changing than years chasing $1B and ending up with nothing.
Build Your Startup Your Way
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