Is Funding Really Number One on Your Startup Holiday List?
In this holiday edition of Zero to Traction, hosts Josh David Miller (JDM) and Cameron Law revisit a recurring theme in the startup world: the obsession with fundraising. With a title like “Funding Is Number One on My Christmas List,” you might expect a wish list of investor do’s and don’ts—but this episode goes deeper. It challenges the very premise that funding should be a founder’s first and foremost priority.
Whether you're in the early stages of building or struggling to get investors' attention, this conversation will help you rethink how you pursue capital—and whether you should be seeking it at all.
Are You Seeking Funding Too Soon?
Cameron kicks things off by reframing the mindset around funding. Many founders treat capital like a gift—something they deserve for having a good idea. But, as he reminds us, investors aren’t offering gifts. They’re making calculated bets on a business model that must deliver a return.
Too many first-time founders approach resource providers with funding as their first ask. But before you ask for money, ask yourself:
Have you talked to customers?
Have you validated the problem?
What will this funding actually unlock?
If the answer isn’t crystal clear—or if funding is your only path forward—you may be setting yourself up for failure.
What If You Don’t Raise the Money?
JDM shares a personal anecdote about being asked by an angel investor, “What will you do if you don’t raise this round?” His unconvincing answer at the time taught him a lasting lesson: being overly dependent on capital signals a lack of flexibility and creativity.
Founders often default to binary thinking: either we raise capital and move forward, or we don’t and we fold. But that kind of rigidity is exactly what investors don’t want to see. You must demonstrate that you can adapt, pivot, or bootstrap your way to the next milestone—even if it's suboptimal.
Strategic Capital: It’s About the Milestone, Not Just the Money
Instead of focusing on “use of funds,” founders should zero in on the milestones that funding will enable. JDM and Cameron emphasize that you need to:
Define the major business milestone ahead (proof of concept, go-to-market validation, product launch).
Reverse engineer what resources are actually required.
Explore creative paths to that goal—capital or not.
Could a strategic partner offer the same value you’re trying to buy with investor dollars? Could equity be used to bring in talent or resources rather than cash?
The Five Virtuous Ways to Raise Capital
JDM walks through the classic “eight ways to get money” framework—but quickly removes the illegal or impractical ones, leaving five viable paths:
You already have it – Self-funding
You make it – Revenue generation
You borrow it – Loans or debt-based investment
You trade for it – Equity financing
You’re given it – Grants or donations
Of these, revenue generation is often the most overlooked. Whether through pre-sales, consulting, or MVPs, many startups can start earning sooner than they think—and use that to fund next steps or generate investor confidence.
Consulting Can Be a Bridge—But Don’t Get Stuck There
One popular option is to offer consulting services to generate revenue that supports product development. This strategy can be especially effective for founders with deep domain expertise. But as the hosts warn, there’s a risk: the consulting becomes the end instead of the means.
Investors want scalable solutions, not lifestyle businesses. If your pitch promises tech but your revenue comes from services, be sure to draw a clear line between the two—and have a plan to shift away from human-powered delivery.
The “Wizard of Oz” MVP: A Creative Hack
To bridge the gap between consulting and software, JDM suggests a compelling tactic: build a “Wizard of Oz” prototype. You simulate the tech experience for the user, but a human (you) is still doing the work behind the scenes.
It’s labor-intensive, but it gives you three powerful things:
Evidence of demand for your tech-based solution
Real customer feedback to refine the offering
A narrative investors can buy into
However, you must charge what the software would cost—not what your time is worth. That’s part of the illusion—and the evidence investors want to see.
Align the Evidence with the Ask
All of this leads to a key insight: lack of funding is usually a signal that the risk-to-reward ratio isn’t strong enough yet. Investors need evidence, and your job is to gather it cost-effectively.
If you’re betting investor capital, they’re betting on your odds. If those odds look like 10% on a 100x return, it might still be too risky. But improve the odds to 20%, and now you’ve got a winning pitch.
Frivolity: Why a Marathon Is 26.2 Miles
In traditional Zero to Traction fashion, the hosts end with a quirky detour. Cameron reveals that the marathon was originally 25 miles—until the British Royal Family wanted the 1908 Olympic race to start at Windsor Castle and end in front of their viewing box. That extra 1.2 miles? Royal privilege.
JDM adds his own levity with a recommendation for The Man Inside, a new Netflix comedy starring Ted Danson that he describes as charming, dark, and completely worth a binge.
Final Thoughts: Rethinking the Role of Capital
Before you make funding number one on your wishlist, stop and ask:
What is the real outcome I need?
What resources can help me reach it—besides cash?
Am I solving a funding problem, or an evidence problem?
In many cases, traction, partnerships, or pre-revenue strategies can do more to move your startup forward than a check ever could.
If you're looking to build something that scales, start by validating something small.
About Josh David Miller
Over the past decade, Josh David Miller has empowered over 100 startup founders and innovators to launch and scale their ventures. As the driving force behind the Traction Lab Venture Accelerator,
Josh specializes in guiding early-stage startups through the intricate journey from ideation to product-market fit. His expertise lies in transforming innovative concepts into viable, market-ready solutions, ensuring entrepreneurs navigate the challenges of the startup ecosystem with confidence and strategic insight.
About Cameron R. Law
Cameron R. Law is a Sacramento native dedicated to building community, growing ecosystems, and empowering entrepreneurs.
As the Executive Director of the Carlsen Center for Innovation & Entrepreneurship at California State University, Sacramento, he leverages his passion for the region to foster innovation and support emerging ventures. Through his leadership, Cameron plays a pivotal role in shaping Sacramento's entrepreneurial landscape, ensuring that innovators and builders have the resources and support they need to succeed.
