Funding sounds nice. If you’re involved in the startup world, it’s like a dream to raise $10 million so you can build a fancy product and waste a bunch of money on stupid marketing tactics that don’t work. Bootstrapping teaches you to be resourceful and manage your money because you only have so much cash and it needs to last. Out of money is out of business.
A significant number of people have approached me to invest in WhiteRaverRafting.com and I have declined each time. That’s not saying we couldn’t use the money to expand and develop some awesome things, but what happens when you take that funding from someone?
You have to answer to them.
The moment someone invests in your company they are seeking a return at some point in another. A loan is preferable to funding because you only have to pay back the interest, it doesn’t matter how. But, if someone invests $50,000 into WRR all of a sudden I have to justify decisions and start showing signals that we’re growing in one way or another. While scaling the brand or business is almost always going to be the goal, you don’t want to ruin the party before its even began.
When it comes down to it, it’s up to the individual to determine how much control you’re willing to give up to reach the goals for your company. Who ever is investing is going to care less about the relationship between you and your customers and more about their return and exit. My advice is control you’re own destiny and be resourceful, not wasteful. With bootstrapping you’re forced to quickly learn cash management, that or be shut down.
37 Signals features: Bootstrapped, Profitable, & Proud a series on companies that have taken no venture funding and still have over a million dollars in revenue. There are affiliate marketers like Shoemoney or John Chow that make this look like nothing, but still quite an accomplishment.
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