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Are You 100% Sure Your Startup Needs Funding?
One of the biggest mistakes you can make is chasing money you don’t need
In this week’s issue of Teaching Startup (#71), I answered a question from an entrepreneur about whether to fortify his bootstrap approach with crowdfunding or angel investment, or go right into a venture capital raise.
I laid out a bunch of options, including clarifying what “crowdfunding” meant in his situation, and I’m pretty sure I got him started down the right path. But one thing about his question caught my eye, and I want to elaborate a little bit more in this post.
Have you considered whether or not you really need funding at all?
Fiction is just as strange as the truth
I just started rewatching HBO’s Silicon Valley again and holy crap does that show still stand up. This time through, I realized, in the very first episode, how different the whole thing would have played out if Richard the founder turned down both the acquisition offer and the investment offer and instead forged ahead on his own.
Better? Who knows. Different? Most definitely. Wouldn’t have been nearly as good a show. But we entrepreneurs aren’t in this for the laughs.
First of all, Richard was gainfully employed and had already fallen into a situation in which he could work on his own project away from his job and on his own time. Granted, he gave up 10% of his company to join an “incubator,” but that’s just another cautionary tale about incubators. I could go on forever about that, maybe in another post.
Living in the heart of Palo Alto, Richard also had access to all the resources and connections he needed. He even immediately found employees who came to work for him in exchange for equity. That same kind of access is a click or a Zoom away for people like you and me.
Does it make startup more difficult? Yes. Impossible? No.
And what was the first thing he spent his funding on? Ugly T-shirts and a margarita maker.
I told you that show stands up.
