Is it possible without attracting investments?
Let's agree that by attracting investments, we mean the exchange of some share of the company for money between you and a private investor or fund.
There are usually two cases when this question may arise.
1. You think you need investments
They are usually needed to build a costly or unique business or scale quickly.
A very costly or unique business should not be your first business. Starting by opening your own modern automated car wash with the required investment of 1M USD, given that you don't have experienced partners, is a bad idea.
Rapid scaling is needed when there is a well-formed and proven concept, as well as a stable and understandable system. Most companies don't reach this stage at all.
So, if this is your first business, there are no partners with successful experience, and the system is not ready for scaling, you don't need investments now.
2. You really need funding
It's possible to do without attracting investments. In the understanding described at the beginning, they have many cons and only one and a half pros.
Pros
— They give you money.
— If you are lucky, in addition to money, you will receive some practical advice and contacts. But it can also be obtained without attracting investments.
Cons
— You are giving away part of your company. After a few rounds, you may end up giving away tens of percent of your life's work, which could potentially be worth a billion dollars or more.
— You're being brain-fucked. You must understand that investors require specific metrics by specific deadlines, promote their ideas and have their oddities. It's one thing when you do something, when and how you want. Another is when there are, let's say, ten people that you need to satisfy.
— There are levers of pressure on you, and they are being used. Other people now control the reputation and valuation of your company.
— Investment problems begin to appear after years. As a result, there is a chance to go somewhere in the wrong direction in your life or, at one moment, lose absolutely everything except for experience.
— Raising investments will probably take you over a thousand hours that could be spent improving yourself and your product.
If attracting investments, buying a Lamborghini yacht, and going into the sunset is not the ultimate goal, then you need to remember the following.
Investment is not winning the lottery — the people who invest in you expect a much higher return and will do anything to save their investment. Many companies are not ready to handle the expected dynamics — the owners burn out and don't do what their heart says but what is needed to get instant metrics.
Other funding options
— Bank loan. If you are confident in your business, why not take a loan from a bank? For the money you receive, you will pay, for example, 10% of the amount, but the company will remain yours. A bank is not a person — a loan, and its conditions can be calculated and properly planned.
— Your users. Sometimes you can negotiate with your fan users. Make an offer they can't refuse. Make them part of your movement.
— If you are creating something very costly, and this is not your first business, then you probably already have money or friends with money who can become your full-fledged partners.
— Crowdfunding. Worth a try. Maybe the world will chip in to make your idea real.
Subjective conclusion
Focus on the product. A good product opens any door. And if you decide to exchange part of your company for money, then make sure that you do it at the highest valuation, on the best conditions, with good people, and take only the amount you need at the moment.
Nowadays, when people need everything here and now, attracting investments seems to solve all problems. Alas, this is not so — you must pay for any money. Now you have a better idea of the value of this particular money.
scriptop.co
Let's agree that by attracting investments, we mean the exchange of some share of the company for money between you and a private investor or fund.
There are usually two cases when this question may arise.
1. You think you need investments
They are usually needed to build a costly or unique business or scale quickly.
A very costly or unique business should not be your first business. Starting by opening your own modern automated car wash with the required investment of 1M USD, given that you don't have experienced partners, is a bad idea.
Rapid scaling is needed when there is a well-formed and proven concept, as well as a stable and understandable system. Most companies don't reach this stage at all.
So, if this is your first business, there are no partners with successful experience, and the system is not ready for scaling, you don't need investments now.
2. You really need funding
It's possible to do without attracting investments. In the understanding described at the beginning, they have many cons and only one and a half pros.
Pros
— They give you money.
— If you are lucky, in addition to money, you will receive some practical advice and contacts. But it can also be obtained without attracting investments.
Cons
— You are giving away part of your company. After a few rounds, you may end up giving away tens of percent of your life's work, which could potentially be worth a billion dollars or more.
— You're being brain-fucked. You must understand that investors require specific metrics by specific deadlines, promote their ideas and have their oddities. It's one thing when you do something, when and how you want. Another is when there are, let's say, ten people that you need to satisfy.
— There are levers of pressure on you, and they are being used. Other people now control the reputation and valuation of your company.
— Investment problems begin to appear after years. As a result, there is a chance to go somewhere in the wrong direction in your life or, at one moment, lose absolutely everything except for experience.
— Raising investments will probably take you over a thousand hours that could be spent improving yourself and your product.
If attracting investments, buying a Lamborghini yacht, and going into the sunset is not the ultimate goal, then you need to remember the following.
Investment is not winning the lottery — the people who invest in you expect a much higher return and will do anything to save their investment. Many companies are not ready to handle the expected dynamics — the owners burn out and don't do what their heart says but what is needed to get instant metrics.
Other funding options
— Bank loan. If you are confident in your business, why not take a loan from a bank? For the money you receive, you will pay, for example, 10% of the amount, but the company will remain yours. A bank is not a person — a loan, and its conditions can be calculated and properly planned.
— Your users. Sometimes you can negotiate with your fan users. Make an offer they can't refuse. Make them part of your movement.
— If you are creating something very costly, and this is not your first business, then you probably already have money or friends with money who can become your full-fledged partners.
— Crowdfunding. Worth a try. Maybe the world will chip in to make your idea real.
Subjective conclusion
Focus on the product. A good product opens any door. And if you decide to exchange part of your company for money, then make sure that you do it at the highest valuation, on the best conditions, with good people, and take only the amount you need at the moment.
Nowadays, when people need everything here and now, attracting investments seems to solve all problems. Alas, this is not so — you must pay for any money. Now you have a better idea of the value of this particular money.
scriptop.co