A 6-Step Checklist For Self-Funding Your Startup
Before you invest, make sure you’re not just feeding a startup money pit
Joe Procopio is a 20-year-plus tech entrepreneur with multiple exits (Automated Insights, ExitEvent) and a few failures. He is currently the Chief Product Officer at VC-backed Spiffy, a mobile vehicle maintenance startup, and also the founder of Teaching Startup, an on-demand advice project. He writes a recurring column for a number of publications, including Inc. and Built In.
It doesn’t matter if you invest $100 or $100,000 into your own business. It doesn’t matter if your net worth is in the millions or pocket change. If you self-fund what turns out to be a money pit, you’re going to eventually put an equally painful dent in your future.
Been there. Done that. Got a bunch of really cool T-shirts.
I’ve self-funded three startups to success — and by “success,” I just mean the opposite of failure (and there were a lot of failures). My first self-funded startup ran profitably for 12 years. The second was acquired relatively quickly. The third, Teaching Startup, has been running for almost three years now on sustainable margins.
For all three successes, I followed the same self-funding plan. But here’s the thing, I also followed that plan to self-fund the failures. Doing that allowed me to get past those failures and eventually fund the successes. I’ve never borrowed from friends or banks, I’ve never used credit cards for anything I couldn’t pay off at the end of the month, and I’ve never put anyone other than myself at risk.
If you eliminate all the bullshit and bravado and bro-ism, you’re left with common sense, hard work, and a simple plan. Because at the end of the day, the success of a startup is based on the brilliance of the idea and the excellence of the execution, not how much money you can throw at it.
Step 1: Don’t Invest More Than You Can Lose
I’m putting this up front because you’d be surprised at how many people would never walk into a casino and put $10,000 on the roulette table, but think there’s something more altruistic about putting $10,000 into a new and untested business plan.