The stoicism philosophy of a VC Broker states that a successful fundraising begins with a clear understanding of one principle: Some things are in the control of a founder or business owner, and some things are not. This fundamental rule helps a founder seeking funding to focus on what they can control. And give out the things they can’t control to the venture capital broker. This rule gives inner tranquility where outer effectiveness becomes possible.
From the perspective of best execution in closing a funding request, entrepreneurs exercise control over an order in their operations or go to market strategy. In this article, we will discuss the goal of an entrepreneur, understand stoic fundraising, stoic view on using brokers and the implementation of the stoic philosophy as a fundamental rule in raising a fund.
The goal of an entrepreneur
The goal for an entrepreneur is to be able to optimally manage the company’s business. And interact in the market while managing the many dimensions involved in the process. One of the challenges faced by founders is to raise the required funding to achieve a competitive advantage in the market.
While the founder does not have control over things like the time it takes to raise funds, the founder’s interactions with a venture capital broker can certainly close the funding request on time. And also other factors in a positive way that’s beyond the entrepreneur’s control. This is the point to incorporate all the connections and expertise that a venture capital broker can offer to ensure successful fundraising.
We often read stories of founders doubling their business growth in a short period by raising funds from investors. Such stories make us wonder – how easy is it to raise funds? However, you might get lucky, but fundraising cannot be created by getting lucky. It is a process. Like any other process, the fundraising process takes time.
One of the main reasons most business owners are unable to raise funds is because they are unable to control their process. Many successful founders have been using the Stoicism philosophy to manage their fundraising process.
Understanding Stoic Fundraising
Stoic fundraising refers to a fundraising philosophy that draws inspiration from Stoicism. It emphasizes the importance of focusing on what is within our control and accepting the things that are not. It encourages individuals to cultivate virtue, rationality, and emotional resilience to lead a fulfilling engagement with investors.
In the fundraising context, stoic fundraising applies these principles to the decision-making process. Moreover, incorporating the venture broker’s skill set to help streamline the process. It advocates for adopting a strategic perspective in the whole process of fundraising. Furthermore, it requires maintaining discipline, and focusing on factors that can be controlled. Rather than getting overwhelmed by the fundraising process.
Founders usually do have the ability to control how they manage their business operations. They have an intuitive understanding about their business. And the different market conditions that can affect their business results. To this end, they can determine things like strategy selection and the pace of execution as well as the broker they consider to be in the best position to assist their fundraising process.
We would also like to share the Stoics’ view on using brokers – it is deep and highly relevant for today’s time. The Stoics had a unique perspective on brokers. They recognized the practical necessity of using a broker. However, they view it as indifferent to the challenges of raising funds for your project. According to Stoic philosophy, using a broker is for cultivating collaboration that speeds up the fundraising process. https://www.jstor.org/stable/4182573
The Stoics believed that internal and external challenges of fundraising, were neither good nor bad in themselves but rather indifferent. They argued that it was the founder’s attitude and use of the broker’s expertise that determined its value. The key was to maintain an attitude of collaboration. And not become excessively attached to the fundraising process that you lose your focus.
When it comes to the challenges in fundraising, we can group performance factors into two. Those that we have control over and those that we don’t have control over. We can then analyze the results to determine the best way to utilize the factors we have control over a given set of circumstances that we don’t have control over. For example, given the funding climate, we can choose the appropriate strategy of using a VC Broker. We can also use these factors, along with an analysis of past results. Such as in predictive modeling of market impact.
The stoic philosophy of a VC Broker
The Broker provides the framework for these measurements. The onus is on the broker to apply weightings to the various factors because each firm’ s goals may be specific to that firm. There may also be different approaches within a firm based on the goals of specific internal groups. These internal groups may each want to apply different weightings to the various factors that impact performance based on their specific goals. From a broker’s perspective, this can be achieved using additional attributes to allow raising funds with differing utility functions.
One way to think about this is that brokers make a clear plan on how to control how the funds are raised on time. They can measure the factors and then analyze those results through usage of a framework which can lead to better future decisions.
By recognizing that certain factors are beyond the control of the founder, the broker can use an attribution analysis to determine how much of a funding request is due to factors beyond a founder’s control and how much is due to factors within a founder’s control. By doing this, the broker can focus on optimizing the controllable factors given a set of uncontrollable factors. The trader can attribute the performance due to uncontrollable factors versus the performance due to the founder’s actions.
As a simple example, it is possible to compare a funding climate move in tandem with the move of a sector which the company is associated with. The change can then be adjusted to provide an actual estimate of how much the funding request moves affected the market and investors interest. Similar approaches for other analytics are possible and can help to identify the best places for a broker to focus on improving outcomes.