by Hoogie Espinosa . October 22nd, 2014
Getting investors for your company comes with great benefits. The most important being capital. However, there are many stories of people wishing they never looked for outside money as it can be quite a pain.
A lot of businesses now, especially service-oriented ones, don’t need that much capital. Developers, designers, and consultants don’t need much money from the get go and make do without investors. Of course, if you’re starting a restaurant or a school, then you most probably do.
Having someone invest on your business means giving them a part of it and some control over company decisions. That can be ok at the beginning since you sort through the possible investors and pick only those that are in line with your direction. However, just because you agree now, doesn’t mean you’ll agree tomorrow.
When you’ve got a pile of cash in front of you, the possibilities seem endless. You can easily spend for things you feel you need. However, that gives us two problems. The first is that you might spend on bad decisions that just weigh down your business, and the second is that spending is really really addictive.
There will come a time that an investor will put their desires over the customer. Perhaps force something their “expert” cousin said, or some avant-garde ideal they found in on an unknown blog. Again, this is about control, but instead of the direction you see the company going, it’s the path the customers want to see it.
The common fear among investors is obviously making a bad investments. You’ll notice a lot of your decisions start leaning towards what can make most profit, rather than what makes it a better product. Without that passion for the mission, you company just becomes just another soul suck.
Everyone knows that a lot of time spent on meetings is wasted. More than half of it is used for small talk that you’re probably not really interested in. Getting investors is a lot of that. Getting to know them, denying them, looking for someone else, talking to someone who knows someone else, etc.
When you’re just starting out, you’ve got nothing on you. No numbers, no solidified model, nothing. And to me, that’s a horrible time to ask people for money. You’re a toddler being thrown into battle where everyone else is warforged.
And that’s it. 6 reasons you might not want outside money. But if your reasons for doing so outweigh everything written down here, go ahead and do what is necessary to build your business.
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