5 Perfectly Reasonable Reasons To Forget About Investments – And Bootstrap
You get a brilliant idea, you start a company with your best friend, you get a huge investment, you fill your oh-so-startupish office withe beanie bags and arcade games, you become the next Whatsapp and get acquired by Facebook, which is a good time for you to go on a soul-searching journey to India so you can write about your startup experience on Medium from a whole new perspective.
That’s what a startup lifecycle looks like, right?
Okay, now let’s get back to Earth for a minute, shall we? Now, even if you get your brilliant idea rolling and actually start your own company (and I hope you do), soon you’ll come to a fork in the road and you’ll have to decide whether to look for funding or bootstrap.
While an investment might seem the more obvious solution (hey, it’s somebody else’s money!), you should really give it a good thought before you start fundraising. There are some pretty good reasons to start off without external help or capital – by bootstrapping:
1. Because you’re not getting an investment anytime soon
Seed funding is what you get when you’ve already got a prototype, have launched an MVP and need to get some traction… if you’re lucky or a really good hustler, which is not a talent to be sneezed at. If you’re not (either lucky or a hustler superior), your investors will be looking for traction as a minimum requirement to even consider your case.
This means that you’ll have to start off all by your self anyways, and if you’re not willing to invest your time and assets into your idea, why should anyone else?
2. You have to focus on revenue
Since you don’t have a nice big fat deposit in your bank account to account for that false feeling of safety, you’re on your toes thinking of ways to earn money, and to do it fast – after all, you need to be able t pay for those little luxuries like rent, utilities and food (ramen?).
This may not be a very laid back, stress-free situation, but it will keep you from the pitfalls of “I’ll figure the revenue model later”, and you’ll put all your energy into building something wortth paying for ASAP.
Chances are you’ll also get better at managing your finance and learn the value of money, which will come in handy when you’ll actually have some – you’ll know how to use it better.
3. You get creative
Whether it’s marketing or customer acquisition, you’ll have to really wrap your head around the ways to get things done with a low budget, and you’ll have to be pretty creative about it – which just might make you stand out.
4. Instead of fundraising, you’re working on your product
Fundraising means doing your research, meeting investors, applying to accelerators, pitching away – it is time consuming, and the whole process can be pretty lengthy. And every minute you spend fundraising is a minute when you’re not working on your product. I’m not saying fundraising isn’t important and won’t help you build your product faster once (if) you get it – I’m just saying there are two ways to go about this.
5. You’ll be more attractive to investors
Oh, what a turn of events. To be perfectly frank, I never said you should never look for an investment. Sure, you can grow into a highly profitable business and never need or want a penny of external funding, but building a stable business that could use some cash to scale is a pretty awesome outcome to.
And when it comes to fundraising, you make a much better case as “someone who makes things happen” when you’ve already made things happen. When you’re bootstrapped, profitable and growing, you have the leverage, something that’s backing you up during a negotiation – something besides your over-confidence and hustling skills, that is.
