These investors, including myself, know what you don't, and they are not telling you. The minute you ask for money, you are playing in their game, they aren't playing in yours. You are at a huge disadvantage, and it's only going to get worse if you take their money. The minute you take money, the leverage completely flips to the investor. They control the destiny of your dreams, not you.I agree wholeheartedly. From my experience getting pinged by VCs interested in Newshutch there are a few other reasons not to accept, let alone seek out, funding.
- Nothing is capital intensive anymore. If your software startup requires a ton of money to get going then you better rethink it. Even manufacturing is cheap; you do a limited run to prove your concept and make enough money to do another run. Maybe if you're doing biotech or other super-science stuff you need VC, but that's not my bag so I can't say for sure.
- Time you spend wooing VCs is time you're not spending on your product. Angels and VCs can have lots of arbitrary hoops (like NDAs, submission forms, and PowerPoint outlines) that they want you to jump though. No thanks.
- The whole point of doing a startup is that you hated having a boss, sitting in pointless meetings, and writing TPS reports right? Guess what a VC will want to impose on you?
- All VCs are "That Guy":
Update: I forgot to mention what to do instead of begging investors... Bootstrap baby! Seth Godin's free ebook The Bootstrapper's Bible and Tim Ferriss' book The Four Hour Workweek both give great insights on how to start your own business on a shoestring.
Nathan…maybe you could shed some light on the rules of bootstrapping for than non-IT guy? My comment on Marks blog…feedback?
Sorry Mark, I just don’t get it…
Unless you can write code yourself and can feed your family for 8-12 months while creating “proof of concept”…how do you start a consumer internet services company with no money?
I am a marketer not an IT guy.
I have 20 years “marketing” experience in B2B performance improvement/behavior modification. I have taken this knowledge and applied it to the problem of childhood obesity with an interactive, online and mobile based solution to get kids off the couch and excited about being ACTIVE.
I have what potential customers (U.S.A. parents and kids) view as a “brilliant” solution that would be well worth paying for…positive customer feedback and future clients.
I have spent the last 10 months researching the market oppurtunity, competition, business model and the ASP/mobile content development process. NOW WHAT?
I need to “pay” to have the product developed and give these new customers something to buy…HOW DO I DO THIS WITHOUT AN INVESTOR?
I could really use some advice…
All the best,
Jeff Amato
Bangkok, Thailand
Hi Jeff, see my next post for ideas.
Jeff,
One route you can take is partnering up with a developer. You’d have to give away a piece of your business but better to own part of a living, breathing business than 100% of a potential business.
Nathan did this with Doug and myself to get Newshutch built. It worked wonderfully to get the site up. (In hindsight, we probably would have done better if we had additionally partnered with an expert in bringing in advertising dollars but that’s another lesson)
Be extra careful to find the right person to partner with. You want someone who shares your vision and loves the work. To reduce the risk of giving away too much of your company to the wrong person, you can always create contract that gives only a tiny percentage to start and increases with time/work completed.