Why should some startups not be raising funds with VCs? Interview with Grégoire Gambatto of Germinal

By Gwen Salley, Head of Investment and Services at STATION F

How much money did you raise? What’s your valuation? How long until you’ll become a unicorn? Who did you raise from? More than ever, our ecosystem glorifies the fundraise, and today, I’m sitting down with one of the strongest voices against it.

Grégoire Gambatto, CEO and co-founder of Germinal. On top of being well-known for his company, Gregoire also became a strong voice in the french ecosystem on many topics and especially fundraising. This interview is a way of questioning the necessity of raising funds with VCs at a time where most startups still see it as a “must” and even a metric of success. 

Germinal is a growth agency which launched a scalable Saas platform a few months ago. Bootstrapped from day one by founders deeply convinced in self-made businesses, what started as a way to avoid excessive dilution now became a real mantra and mindset to promote bootstrapping. 


Gwen Salley: To dive right into the core topic of this interview: Grégoire, why do you think startups should not raise funds?

Grégoire Gambatto: I think there are two really different entrepreneurial mindsets out there. Splitting entrepreneurs into two distinct groups.

First I see entrepreneurs with a huge ambition who want to launch big projects, want to go really fast and know they will inevitably be losing money for a long time until they get to their break even point. This is particularly true for startups working on topics like Social, Deeptech or Hardware. Usually requiring years of research or growth before being able to apply a profitable monetization strategy. For this typology of startups, raising money is mandatory because they could never survive without it. It represents about 10% of the whole ecosystem. 

Second, there are all these founders who deeply believe their projects are similar to option one when they could actually go big and go fast while keeping 100% of their equity. And I insist on going fast because it might sound utopian but it actually is a fact. I’ve never been as fast as when I had no money in my bank account and this is what helped me bring Germinal where it is today. 


GS: Then, how could you explain that most startups want to raise funds with VCs? 

GG: I think it is a global problem. First, there’s never been as much money available as now for venture investment. Second, raising became part of the “startup playbook” making it some sort of “must-have” to succeed.  

The main issue is that founders don’t even take a minute to consider the alternatives to it (debts, public financing, crowdfunding,…). Even founders who are following our second pattern with a viable business model and the ability to bootstrap don’t do so. They’re not aware of the existing alternatives. They are foolishly following what entrepreneurs consider as the ideal pathway to a successful startup story with fundraising as the final achievement. But I absolutely don’t blame them, I only observe this is too common in today’s ecosystem. This industry easily forgets that a startup is all about a product and about its execution. 

By focusing on fundraising founders overlook what should be the core of their concern: their product, their organisation, its culture, and its efficiency.

GS: Don’t you think founders can master both at once? 

GG: We can always find exceptions but I don’t know many of them. 

Founders spend 9 months running after VCs to get an amount of money they’ll get to spend in the following 18 months. The bigger the amount, the more impressive the fundraising appears. Of course they get carried away with euphoria and lose focus. 

I think it is even trickier for first-time entrepreneurs and I want to warn them about it because I know I would have turned mad with so much money a few years ago. 

GS: So if I sum up the main risks of raising funds are, in your opinion, the followings: loss of focus, governance and dilution, and threat to culture.

GG: Exactly! And founders believe they will offset that with the strike force they’ll get from their fundraising. For example, Notion mastered that governance issue by raising very late – they raised 50 million dollars at a 2B$ valuation. They basically conceded 2.5% of their equity instead of around 20% in typical rounds. 

GS: You touched upon it a little bit earlier but what about the cases in which you think it is useful to raise? What are the good reasons and the good practices to stay away from these fundraising abuses we mentioned? 

GG: As I said, I think it can be really disastrous for first-time entrepreneurs so you ideally be an experienced founder with a deep understanding of your market. 

That’s from a psychological perspective.

If I focus on the businesses that need cash immediately, I think it depends on the problem you address. A hard barrier to entry into your market can justify the need of significant initial fundings. For instance, you could have to comply with legal constraints such as obtaining agreements that can delay the go-to-market. Or you noticed extreme traction for a product that can’t have a short-term profitable business model, for example, B2C offers with a large demand that involves going fast and wide. 

The startup’s break-even point can be either quite close (in this case you should bootstrap instead of raising funds) or very far (in this case, you will often need to raise because your survival depends on it). 

GS: Part of the problem is also that we are putting many different types of companies together and call them “startups” even though they all have different models and address various sizes of markets. How would you define a startup? 

GG: A startup is a business that can grow really fast and that can benefit from large economies of scale. So a startup is, in my opinion, the combination of growth and scalability. By scalability, I mean getting really profitable beyond that breakeven point.

GS: What was your strategy at Germinal? 

GG: We started as an agency by focusing on our service to build our brand image, develop our expertise on growth strategies, and reinforce our credibility. We don’t consider ourselves as a startup but more as a hybrid model with an agency structure and a Saas offer we developed a few months ago. Even though we started as an agency (which is by definition non-vc-compatible) we have now that really scalable offer to power our growth. 


GS: And now that you have experience, could you consider raising funds? 

GG: Absolutely not because I wouldn’t know what to do with it! We had offers but now we are profitable we can auto-finance our new projects so we are not considering it.

GS: You are part of Frst Wings led by Pierre Entremont, cofounder and partner at Frst. Frst Wings is a club for up-and-coming business angels.  Don’t you think becoming a venture investor can seem a little bit inconsistent with your point of view on fundraising?

GG: It is not because I will remain true to my mindset and principles. I look for projects with huge traction, long-term breakeven perspective, founders thoroughly aware of their market, and addressing main pains. And overall, people who need big amounts to do so and who’d fail without that money. 

By the way, I must mention I am very honored that Pierre allowed me to join! 

GS: If we should take one key thing out of this interview, what would it be?

GG: No matter what decision you take at the end of the day, the only thing you need to remember is that you have different options. 

Most of the role models founders really look up to follow the traditional path of raising venture money and growing from there. I really think we need more diverse role models like founders bootstrapping businesses from day 1 and building amazing success stories without raising a single dime. Those entrepreneurs should be proud of keeping 100% of their company! There are plenty of amazing examples out there with bootstrapped success stories like Buffer, MailChimp, Basecamp, or GitHub. 

Giving reach to their testimonials is the only way we will make changes happen.


Overall, the idea of raising venture money is deeply engraved in today’s ecosystem. It almost appears as a “must-do” in order to be visible, showcase potential, and give a sense of success. Unfortunately, behind the word “startup”, dozens or even hundreds of models coexist and all of them should consider or focus on raising funds from venture capitalists. The main reason behind this confusion is that successful bootstrapped entrepreneurs are mainly unheard of, less visible also because their growth is usually done over years of hard work and sweat. The sense of “overnight success” that can happen when receiving venture money on your account is simply non-existent for them and as a result, we focus on these shiny fundraises to make great article headlines. Even though this can sound awkward and even out of place by ecosystem professionals, this is what young, first-time entrepreneurs see and perceive when starting their own entrepreneurial journeys. 

Gregoire’s point of view is not only refreshing but also not enough. We should encourage new types of successful entrepreneurs to speak up and show alternate paths. Same with VCs who could educate better on what venture money is for and what it isn’t for. By doing so, we will not simply become a more mature ecosystem but also a more efficient one 🙂