BootStrap BootCamp 2

This is the second in a series of posts following a BootStrap Bootcamp I ran in NYC in July.

Should you bootstrap your venture?

Before answering that, I’d ask you this:  Do you have a choice? If you haven’t  launched a successful startup before, don’t have a stellar track record within the industry you are pursuing, and don’t have a strong network of angel and venture capital investors, you might find it very tough to raise capital. Even if you can do it, it might take you nine months or longer to scrape together your funding. That’s going to be a long, painful process.

But what if do have the ability to raise capital. Should you always do it?

Pros:

  • You’ll be able to pay your rent without eating into savings
  • If you budget properly, you’ll know you can keep the business going for some period of time
  • You’ll probably be able to move faster
  • You may find it easier to sleep at night – at least when it comes to your own personal risk

Cons:

  • Once you raise capital, you have to a responsibility to someone else. That means you’ll have to consider their interests when you make big decisions, which means you probably won’t have as much flexibility. For example, if you decide to change your business model, you’re going to want to get your investors to agree it’s the right thing to do. Even if you’ve only sold a small stake, you don’t want pissed off investors for a multitude of reasons (e.g. You need their help, they can make life difficult for you, etc.). That also means, you’re reputation with future investor prospects will be on the line.
  • If you’ve got the money, you’ll spend it. That’s just human nature. The flipside of this is that if you don’t have the money, you’ll probably do more with less.
  • Even if you have great contacts, it can take months to raise capital. Your time might be better spent operating your business.
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