I look at raising money as a necessity for most fast-growing tech businesses. The truth is that generally you need to move faster in the world of technology than you do in most other industries and it is normally not possible to do this organically.

Raising money can help a business to accelerate its progress and take advantage of being early into a market. And it shouldn’t just provide an injection of cash, although this is clearly the main benefit – a good investor should also provide additional value to the business in terms of support, guidance and connections.

My advice when raising money is to raise more money than you need and also to raise it from the right people. Raising money is time consuming and financial projections are generally too optimistic and it’s for these reasons I’d try to raise more money than you think you need, assuming it’s available.

At MessageLabs we raised $30M from US based investors but only about half this amount was built into our ambitious expansion plans and associated cash projections – we didn’t know how we were going to use the rest of it but we were certainly pleased we took it when we did. We raised the money for MessageLabs in 2000, after only 18 months, but there was such momentum in the business and the   overall market for any Internet-based business that we were able to achieve a great valuation and choose from a long line of VC’s. It then turned out that it took a lot longer and cost more than we had expected to scale the business globally. One of the reasons for this was that we made our share of misteps along the way – one of which was an over-reliance on channel partners to sell the service that didn’t work so well when it comes to selling a SaaS service and another was that we needed to completely rethink the architecture of our service in the face of the huge growth in email volumes we were processing. But, most importantly, it’s just a reality of life that things generally take longer and cost more than you imagine they will.

Who you recruit in the early days of your business will define its DNA. The look, feel and culture of your business are established by these initial hires and it is vital that you choose the right people from the start.

You have to really invest the time and money to ensure that the majority of your key hires are good ones and establish the foundation stones for the business. Some of these people you’ll know already especially if this is not the first time you’ve built a business and these are the ones that you can most rely on. But for the rest I have a few tried and tested tips to try to increase the probability of making great hires:

It’s an on-going part of your job

All too often entrepreneurs will look at recruitment as something that is not a top priority and something they fit in around their day and their other responsibilities. I think this is a mistake and that any good entrepreneur, especially in the all important early stages of building a business, needs to look at recruitment as a top priority and devote around 10-20% of their time to it. This goes beyond finding someone that you have a role for at the present time to always putting in the time to build up a pool of world class people within each discipline so you have some warm leads ready for when you need them. In my experience the best time to establish contact with someone is when you don’t have a specific agenda and often the best people are not looking for a job. So you meet people with the pretext of ‘it’s always good to meet high quality people that are introduced to me etc. etc.’ and you gently sell them on the future of your business and take it from there.

Quality not quantity

After several requests, I’ve decided to write  down my ‘lessons learnt’ that I have talked about in various presentations over the last couple of years. After 17 years as an entrepreneur, having founded 4 businesses, there are so many things that I have learnt along the way and I have tried to distil them down to a top 10 based on feedback and what I think are the most important.

No. 1 – Instinct + conviction + luck can be a powerful thing

You have to back your instincts. People will always tell you why you shouldn’t do something often because they’re more used to the slow moving world of large companies or are just afraid of change. Plus, when you have a really ground-breaking idea there are no reference points for what you’re proposing and that can make people uncomfortable.

Most people think in terms of small, iterative steps away from the existing order of things; really good ideas often propose a radical shift that has never been seen before. I bet that when Henry Ford started to talk about the motorcar everyone would have been much more comfortable talking about how to breed horses better and most probably thought old Henry was barking mad. But his idea didn’t do too badly! I’m not saying you should ignore all the feedback you get but I certainly wouldn’t be too worried about some negative feedback – many people just can’t get their heads around radical thinking. A fear of failure can also hinder your belief in your instincts. This reminds me of a quote from Bill Wilder, the American filmmaker:

Trust your own instinct. Your mistakes might as well be your own, instead of someone else’s.

What he is saying here (I think) is to trust your instincts rather than be persuaded to do something that you don’t believe in, and that if you make mistakes they may as well be your own so you can learn from them. There it too much fear of failure, especially in the UK, but failure can be an amazing learning experience that you can take into your next venture. Sometimes the stars don’t align but that doesn’t mean you should give up on your dreams. I have lived in New York for eight years and the Americans have a much better attitude towards failure where it is seen as part of the learning experience, which I completely agree with, and makes for a much more successful entrepreneurial environment.