We work with many different types of business. From the extreme start-up to large mature enterprises looking for a way to transition ownership from the founding partners. We’ve just about seen it all. Having seen the entire value-chain from start-up to final divestment, there is one blaring roadblock that can cause sleepless nights, ulcers, and ultimately prove a disastrously huge waste of time—fundraising.
A Few Reasons Fundraising Wastes Founders’ Time
Unless you’re friends with a wealthy fool who trusts and adores you enough to provide you with funding so you can pursue your dream, then you may want to consider bootstrapping.
Benefits of Bootstrapping
Personally, eating Ramen and rice for 18 months while you attempt to get your company off the ground is not a fun lifestyle, to say the least. However, there are a number of benefits. First, you stick to what is important. In this case that means getting a product ready to launch, getting it out the door and getting customers with cash flow.
Second, you don’t give up equity. Many entrepreneurs forget that raising capital has a very high price. They’re called vulture capitalists for a reason. They’ll take their hunk of flesh, usually in the form of equity.
Finally, bootstrapping makes for great stories when you finally make it big. “Remember when we were in that basement of that house we rented and we were arguing over stupid things like logo design?” etc. etc.
My personal take is only go after funding as a last ditch option. If you want to start a business, save some money, gain a reputable skill and start a company on your own with your savings and your skill. That way when a huge liquidity event occurs down the road, you don’t have to give a hunk of flesh to the VC.