Current in Entrepreneurship Blog

Why I Didn't Raise Money (and Why You Might Not Want To Either)

As an entrepreneur, I've learned a lot of valuable lessons throughout my journey. One of the most important? Raising capital isn't a badge of honor – it's a responsibility you carry with you forever.

Sure, every entrepreneur makes mistakes. In fact, a 2016 study in the Annual Review of Psychology suggests that bigger mistakes, especially the ones you're confident about, can be the most valuable learning experiences. But there's one mistake I see way too often:

Making fundraising a priority right from the start.

This happens because entrepreneurs often fall into a trap. They get excited about an idea and their immediate thought is, "How much money can I raise?" But before you go chasing investors, remember – when you incorporate your company, you own 100% of it. Every extra hour you dedicate to saving money contributes to your "sweat equity," allowing you to hold onto that ownership.

Raising money, especially as a young company, means giving away a piece of your pie. You'll have to sell a larger percentage of your ownership because you're unproven.

Think of fundraising as a last resort, not an accomplishment. My own success is largely due to the fact that I didn't jump straight into raising money.Now, bootstrapping has its challenges. You won't have the resources to hire people with skills you lack, and your runway might be shorter. Mistakes can be costly and even put you out of business.

But here's the silver lining: not raising money forces you to learn new skills.

Developing these skills has been crucial to my success. I can read financial statements, create marketing plans, understand data, and make informed decisions – all because I had to learn how to do them myself. Could I have hired someone for these tasks? Absolutely. But by doing them myself, I was able to move faster and be more efficient.

This is where I think I differ from many entrepreneurs. It's not about "taking the money, hiring a bunch of people, and getting an office." It's about figuring it out yourself.

Can't afford salespeople? Learn to sell. Struggling with online marketing? Become a digital marketing expert. Need to manage and lead? Embrace the challenge and build those skills.

Building sweat equity isn't just about protecting your ownership. It's about equipping yourself with valuable skills that will benefit you throughout your career. And trust me, you'll make mistakes along the way – but those mistakes will be your greatest teachers.

So, before you chase investors, consider the potential benefits of bootstrapping: the ownership you retain, the skills you develop, and the invaluable lessons you learn. It might just be the best decision you make for your entrepreneurial journey.