Rand Fishkin, founder of Moz and SparkToro, says taking VC funding may have been an ego play that cost him. Competitors SEMrush and Ahrefs generated over $100 million in revenue without early VC money. Venture capital works for only about 1% of startups, yet it's marketed to everyone.
Rand Fishkin is one of the more colorful personalities in startup world. He was famous as being the founder of Moz.com, and now he runs SparkToro. Back in his Moz days, Rand raised venture capital from a tier 1 fund, and in this clip he talks about his reflections on that and the conclusion that he reached, which is that 99% of companies should not raise venture capital. Let's listen to Rand.
Amy, Brad's wife, was reading her blog and she had written about my experiences fundraising, uh, and Amy sent it to Brad and then Brad reached out to me. So that's, that's how I got connected to Foundry. Um, and yeah, we, we formed a, a close friendship for a number of years. You know, Brad was obviously an investor and I think we, you know, I got entranced, entranced by the world of venture, um, for a long time. Like I, I wanted to play with the big kids. I felt like an outsider. I felt like I wasn't good enough. I felt like in order to be somebody, I had to do what all the cool kids on the front page of TechCrunch and the New York Times and the Wall Street Journal were doing. I don't know, for whatever reason, I foolishly, I never even considered the path of, hey, what if I built a quiet, successful business in this field that happened to do really well. Um, which interestingly enough, the two companies that beat Moz eventually, right, that took market share from them and won the space, neither were venture-backed until like the very end, right?
They're very, very late stages. Is that something like SEMrush? I'm not super familiar with them.
Yeah. Okay. Yeah. SEMrush was one of them. Now, now they're a public company and Ahrefs, which never took money and is still private and is north of $100 million in revenue. Right. And, um, yeah, I mean, that, that very easily could have been Moz. I think if, uh, if my ego had been in check and if I had thought more carefully about it and, you know, and maybe if the, I think if the venture community too had been, had, had looked at our business and said, you guys are onto something amazing. You should not take money from us. Like, let me show you this other path. Um, but that is not marketed to any founders, right? Venture is marketed to all founders, even though it's wrong for 99% of them. I think even yourself, right? When you were a VC, Mark, you would have said venture is wrong for 99% of companies.
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