On funding and business success

Sometimes it seems like a startup is only successful if it has raised capital from investors. These startups are featured in the media. On the business side of WordPress, there’s a lot of talk about acquisitions and the raising of capital. But what defines success?

Companies that have raised growth capital often appear in the media. They at least seem successful. There are also many companies that never raise capital and yet grow year on year. Yoast was an example of this. Perhaps Yoast would have grown (even) faster if we had raised growth capital.

I am now an investor. I now work with companies that do raise growth capital for their company. We are always critical of what entrepreneurs want to spend their money on. Raising money should never be a goal in itself. If you don’t need the money, I would advise you to never go and collect it. Don’t give away ownership of your company unless it will impactfully help your growth.

Back to my question: When is a startup genuinely successful? 

To me, the only metric to measure the success of a company is whether or not that company is profitable and remains profitable. A profitable company has proven that people are willing to pay a reasonable amount for the product or service they’re offering. Many fancy startups raise a lot of money, but can never become profitable. Perhaps they’ll be selling many products, but not at the price necessary to pay their costs. In my view, the promise of their startup is very successful, but the company itself isn’t (yet). So, I define success as a profitable business!

This article, On funding and business success, was published at Post Status — the community for WordPress professionals.

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