From SXSW: Should Your WordPress Site Seek Funding or Venture Capital?

Ever since Twitter first gained popularity at the annual SXSW Interactive festival in Austin, Texas, it has become known as the place for start-ups to try and make a name for themselves.

-The WordPress booth at SXSW 2012

I’m coming to you from the Blogger Lounge (no relationship with Goolge’s ‘Blogger’ by the way), where one of the ongoing themes that continues to permeate the conversations here is companies raising crazy amounts of money to fund development and launch new products.

By pure luck, I happened to be walking by the Mashable House yesterday afternoon when I was asked if I wanted to watch a preview screening of Microsoft’s new documentary on start-ups called “Ctrl-Alt-Compete“. Even better than the film was a panel discussion that followed with experienced entrepreneurs and investors – heavy hitters it turned out. You can read about the video and the speakers here.

The discussion that occurred seemed relevant to many of our readers here that may be starting or continuing to grow WordPress based businesses.

Insights and Advice

  • Don’t look for a problem to solve and build a company around it – first and foremost you must be passionate about your product – not just out to make money.
  • 90% of businesses that raise money shouldn’t and don’t need to.
  • Of the 10% that should, most raise more than they should.
  • Only look for money if it will help you come to market and grow in ways you wouldn’t otherwise be able.
  • The original reason web based companies needed funding in the past was because hosting was expensive – you had to have your own servers, data center, and staff to support it. With cloud hosting services, this barrier is gone.
  • Don’t wait until your product is perfect to launch. Put it out there and make improvements based on user feedback.
  • The relationship between entrepreneur and financier does not seem to be a good one on most occasions. Once you have their money, they will want their advice to be followed. They probably won’t be as creative or visionary as you.
  • Funders usually like to live near the company, making it much harder for foreign or distributed companies to raise money in the US.
  • If you can’t see ways of your business still being around in 50+ years, then you are probably going down the wrong path. Don’t look for an “exit strategy” of selling your company or try to fill a quick void. Be in it to be a game changer.

Reading through these points, you probably get the sense that for the overwhelming majority, there is most likely zero reason for a WordPress based business to seek venture capital or investors.

Automattic and WPEngine are two examples of WordPress based businesses that have received significant funding from investors. Let us know in the comments if you know of any others!

On a side note, Automattic and WordPress have a large following and presence here on the trade show floor – most likely paid for with VC money. It is excellent seeing the community represented at such a large event!