By Chris Heivly, Managing Director at Build The Fort and Startup Community EIR @ Techstars

We just wrapped up our 5th Raleigh Durham Startup Week. And when I say “we,” I mean me and 41 of my best friends who somehow decided that the highest and best use of their time was to help pull together a week-long startup circus for the area. And I mean circus in the best possible way.

There were so many different types of people (we had more than 2,700 attendees) from all over the US attending workshops, listening to our daily keynotes, or just meeting new friends.

During the event, Erika and I — and by “Erika and I,” I mostly mean Erika — asked over 100+ founders one simple question:

“What is the one thing blocking your progress?” Almost every founder said the same thing. Capital. Money. Funding. Investment. Cash.

Of course, they said capital.

New founders always think they are constrained by capital. And let’s be fair: they are not completely wrong. Capital matters. I am not here to tell you money does not matter. I have raised money. I have invested money. Money matters.

But here is where we get ourselves into trouble.

The founder says, “My biggest problem is capital.”

Then the institutional leader hears, “The biggest problem in our startup community is capital.”

Then the economic development person hears, “We need a fund.”

Then the university hears, “We need a pitch competition that writes checks to the winner.”

Then the corporate sponsor hears, “We need to write more checks.”

My thought is this — capital is not the biggest driver of startup success.

The biggest challenge for an early-stage founder is not raising money. The biggest challenge is figuring out whether anyone actually wants what they are building.

That is called product-market fit. And no amount of capital magically solves that.

You cannot fundraise your way to customers who care.

You cannot buy your way into a market that does not feel the same pain you are planning on solving. 

You cannot spend your way around a weak value proposition or business model. 

The capital trap is the belief that the next check unlocks the next level.

Sometimes money accelerates progress. But sometimes money just accelerates confusion.

And confusion with a bank account is still confusion.

Which brings me to the intersection of capital and community leaders. Because founders are not the only ones who fall into the capital trap. Community leaders fall into it all the time.

Capital is attractive because it is easy to understand. It is easy to announce. It is easy to put in a headline.

“New $25 million fund launched.” That sounds important. And it might be important. But it is not a strategy by itself.

If your community has weak founder networks, capital will not fix that. If founders cannot find mentors, capital will not fix that. If experienced entrepreneurs are not accessible, capital will not fix that. If universities, investors, corporates, and startup programs all operate in silos, capital will not fix that. If your community only celebrates fundraising and never celebrates customer discovery, capital will amplify the wrong behavior.

If the only thing we celebrate is money raised, then every founder learns that fundraising is the key to winning the game. But fundraising is not the game. Building a company is the game. Fundraising is but one tool in the game.

So, community leaders, here is my plea. Do not hear “capital” and immediately only build capital programs. Hear “capital” and ask this question: “What does the next dollar actually prove? Not buy. Prove.

So when a founder says, “I need capital,” do not dismiss them. Ask what they would do with the next dollar.

Because the goal is not to build a community full of funded startups.

The goal is to build a community full of durable companies.

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