For many entrepreneurs the biggest point of confusion when starting a new enterprise is identifying what is necessary to start a business and what is necessary to obtain venture capital.  In boom times, this differentiation is often not necessary.  Often you hear about start ups that obtain financing, and then “find a business model.”  It is certainly true that many venture capital backed early stage businesses seem to meander a bit, as the founders take advantage of a multi million dollar financing round to find the right formula for success.  And, these success stories (if success is getting money and then figuring things out) reinforces for many founders the idea that the most important thing for any start up that has aspirations of growth is to get capital first.

Unfortunately, for many entrepreneurs and others in the emerging company ecosystem the concept of obtaining capital, and then growing a business seems the natural way of progression.  While, this might be OK when times are good, when VCs are not financing start ups (and Angel investors are worrying about their stock portfolios), this formula appears to break down.  And, many seem to conclude, without venture capital there is no way to start a business.