Product before fundraising

I sit in a lot of meetings these days where founders show me slides. Living in Marbella, you get used to people coming through, wanting to talk about their next big idea over a coffee. Often, they want a little bit of angel money to build their first version. They have a slide detailing the problem, a slide detailing the solution, and a spreadsheet showing exactly how much they will spend over the next eighteen months to acquire users. I usually ask them how many people have bought the ugly, broken version of their idea. Usually, the answer is none. They explain that they cannot sell it yet because the code isn't written, the branding isn't finalised, and they need a lead developer. It is a very neat, logical story.

Buying time to avoid the truth

I get why it happens. Building in secret with money in the bank feels wonderfully safe. You get to rent an office, hire a few developers, and sit in long meetings arguing about logos and button placements. Reality is kept safely at arm's length. But money in those early days is just a buffer against finding out if anyone actually cares. When I started out in sales at a PR agency in Stockholm, I was on commission only. Everyone around me told me it was a terrible idea. But I met Fredrik Bage there, and he told me I would be good at sales. More importantly, the setup meant there was nowhere to hide. You either convinced someone to hand over cash for what you were selling, or you didn't eat. When Fredrik and I later co-founded Mediapilot, we didn't have the luxury of a long runway. We had to figure out what people wanted, quickly, and get them to pay for it. The product was rough. The pitch was unpolished. We were making it up as we went along. But we grew it over roughly seven years and eventually created more than a hundred jobs, entirely because we were forced to listen to the market from day one instead of listening to investors.

Raising money early is often just an expensive way to delay finding out that nobody wants your product.

If you can sell a barely functioning product to ten strangers, you have a business. You learn more from those ten painful, stuttering conversations than you do from closing a seed round. Let me explain. When you sell something rough, you find out exactly which part of the problem makes the customer open their wallet. They will complain about the design, they will find bugs, they will tell you the onboarding process is a nightmare. But if they still pay you, you know you have hit a nerve. During my time on the commercial side at Happeo, I saw firsthand how software actually gets adopted inside companies. It never happens because the pitch deck was pretty or the vision was grand. It happens because a specific person has a specific headache, and your product is the only aspirin they can find.

When you actually need the cash

I will admit there are exceptions. You cannot bootstrap a space programme or a semiconductor factory in your garage. If you are building hardware, or deep tech, you need capital before you can ship anything meaningful. Even with Substrat, the infrastructure we are building for AI developers right now, there is a baseline of technical heavy lifting required before the thing even switches on. We cannot fake the core technology. But those are rare categories. Most software companies do not fit into them. Most software companies are building tools that can be hacked together, faked, or run manually behind the scenes for the first ten customers. You can be the software for the first month.

The scars of early sales

Now that I do a small amount of angel investing myself, I look for people who have been rejected by real customers. I want to see the scars of early sales. It tells me they are dealing with the messy reality of human behaviour rather than the clean lines of a spreadsheet. With Anchor, where we are building AI tools to help alienated fathers navigate family court, the whole premise is built on raw, difficult human problems. You cannot guess what those fathers need from a whiteboard session in a nice office. You have to put something in their hands, see where it fails to help them, and fix it based on their feedback. That is the actual work of building a company. The rest is just playing dress-up.

I'll be honest with you, I still struggle with getting this balance right. It is incredibly tempting to raise money to hire smart people who can solve your problems for you. I update a written life plan every year, rating my work, finances, health, and family time out of ten. I have done this since around 2010. Looking back through those notes, I can tell you that the years I stressed the most about money were also the years I learned the fastest. Necessity strips away the nonsense. It is a bit like my tennis game: I play badly and often, but I only actually improve when I am losing to someone better than me. I haven't got this all figured out, and I still occasionally look at a brilliant pitch deck and want to write a cheque before they have sold a single thing. But if you have a choice between raising a million euros and finding ten paying customers for a broken prototype, take the customers. The money will still be there later, and by then, you might actually know what to do with it.