You only have to do a very few things right in your life so long as you don’t do too many things wrong.
Warren Buffett
I was recently invited as a Keynote Speaker for the DTU E-Summit ’26 at Delhi Technological University (Formerly Delhi College of Engineering), India.
The Speaker session was well put together by the E-Cell DTU Team, and the team and the audience queried on varied topics such as, including but not limited to, what differentiates startup ideas that remain ideas from those that become real companies, balancing growth with financial discipline and runway management, when not to fundraise during your startup journey, the skills every entrepreneur should master, and more.
The recorded session is shared below, as also some of the ideas are shared right after.
Though questions were taken up on varied topics, we will address when not to fundraise during one’s startup journey in this post.
A venture should ideally not raise Venture Capital (VC) when the business is not naturally suited to the VC model; some examples of the same being that the venture has not yet proven it’s basic product-market fit, it cannot credibly scale into a very large outcome, or the capital would mainly be used to survive / figure some of the basic things out rather than accelerate a clear growth engine. In practice, VC is a good fit and works best only when speed, scale, and a venture-sized exit are probable; otherwise, the dilution, board control, and pressure to grow fast can hurt the venture more than help it.
WHEN NOT TO RAISE VENTURE CAPITAL
I. There are no clear indicators about the road to Product-Market Fit (PMF).
If customers are not consistently using, retaining, and paying for the product, VC money often ends up just funding more experimentation, instead of scaling something that already works. Accelerating or even maintaining the growth rate, vis-à-vis managing early numbers and traction, is easier said than done.
Cases where the ventures might still be able to make a solid case for VC pre-basic PMF include deep-tech, biotech, or platform-shift companies that must raise capital before, because the product itself requires heavy R&D or long timelines. In those cases, investors are considering and betting on future trends, the current pace of technological progress, and future market behaviour and timing.
II. The cap table is broken or too messy.
If founders own too little, prior investors own too much, or there is dead equity and no clear governance, institutional investors may consider the round as hard to close or structurally difficult. Having politically, judicially, or bureaucratically-affiliated leaders with significant equity on your cap table might also have less desirable effects on your fundraising efforts at the earliest stages. Needless to say, there should also be no significant equity for anyone, especially co-founders or core team members, with questions on their integrity in the past (everything will come up in due diligence).
Ideally, before your very first institutional fundraise happens, the founders and the founding team working full-time for the company should still have at least 70 – 80% of the company equity with them, so that even with succeeding fundraising efforts as everyone gets diluted, there is still enough incentive to carry on and take the results to the finish line, vis-à-vis generating returns, and / or exits, to the investors.
To redeem a broken cap table, one will have to fix this through rebalancing ownership, removing dead equity, or restructuring governance. Easier said than done, but harder to fundraise till this happens.
III. The market is too small or too slow, and the margins are razor-thin in a crowded market.
After securing venture capital, most businesses invest in growth while improving unit economics over time. Given how much time, capital, and energy are required to translate into a massive outcome, chances are that low-margin, highly competitive businesses in a crowded or saturated market can end up burning cash without ever creating the venture capital-sized scale returns required for the investment to be considered successful. A solid business can still be a bad VC-Business fit if it is unlikely to reach the scale VCs need for their return profile within their fund cycle.
As Don Valentine would say, “Target Big Markets: If you don’t attack a big market, it’s highly unlikely you are ever going to build a big company.”
Do note that in cases where ventures are disrupting the current business landscape and creating a platform shift altogether, even though they might have thin unit economics early on in a market that is huge enough, the ventures can still improve upon and create some dominance or moat with volume, network effects, or infrastructure advantages. In such cases, a startup can make a credible case for venture capital if it has strong retention, a clear wedge, and a credible path to a large outcome, and where venture capital might work out for the stakeholders involved, including, and especially for, the investors. Two examples would be Reliance Jio in India and WhatsApp globally.
IV. Lack of focus on, or within, a single business.
If you are a first-time founder managing 5+ different businesses at the same time, chances are that you are sacrificing your focus and the potential success outcome a fair bit.
Many eons back, I was part of the founding team with a friend who is a Marquis Who’s Who serial entrepreneur & global innovator (we were at least a decade early to the market, if not more), and we were planning to get into multiple sectors with customized innovative hardware-software offerings at scale for those sectors. I remember catching up with my good friend Yinglan, for whom I have the highest regard and respect, who shared with me that “At the earliest stages, if you focus even on ‘just two’ entirely different things, you might end up focussing on none.”
It’s one of those timeless pieces of advice that still holds.
It is tough enough to build a single venture (90% of the startups fail): If the founders do not come across as wholly committed to going all out for a single venture and outcome, it is only fair not to expect institutional investors to commit their capital to a single venture outcome, from amongst the multiple ventures where the focus might be getting divided.
Over time, as one gains more understanding of high-quality teams, putting in place the right incentives, management systems, processes, distribution, the domino effect, etc., one might be able to manage more than one business at a time. We will always have outliers like Elon Musk, Jack Dorsey, and Brad Jacobs, amongst other good business leaders; but managing multiple businesses without the right foundation and frameworks first built in works less for most people than we might assume.
At the end of the day, one needs to take into account that the leaders in venture capital firms are also operating their own businesses, with returns to be generated for their Limited Partners (LPs) within their committed fund cycles. If the investment does not look like it can generate the kind of returns within the specified time period, more often than not, the venture is just not a fit for their investment thesis.
More often than not, one’s venture might not necessarily need a huge amount of capital to be invested at the starting line itself. If a company can reach profitability or meaningful scale (and if that happens to be the goal) with modest funding, venture capital might not really be required.
Also, given there are always exceptions, if you happen to be a serial entrepreneur with an exit track-record, or if you are a first-time high-quality founding team with integrity, who has this crazy vision about the future, and the execution chops to disrupt the status quo and make things happen, for all you know, despite all the odds and all the investment theses, you might still luck out and either still raise the funding, or make it to someone’s anti-portfolio.
Keep refining, keep building!
*Delhi Technological University (DTU), formerly Delhi College of Engineering (DCE), is amongst the leading technology institutions in India.