The majority of organization leaders want their organization to do more. These leaders either want to serve more customers or provide more value to existing customers. This growth mentality is at the heart of the capitalist system. It’s ingrained in us. Our desire to do more is not necessarily a bad thing, achievement is at the heart of the human existence. While many companies want to grow, the manner that they grow can be quite different. The central question is: are you going to raise funds or bootstrap?
The Virtue of Venture Capital Funds
The rise of venture capital is a microcosm of the capitalist system. At the core of capitalism is the believe that markets will resolve discrepancies. Venture capital is the creation of a market to validate business ideas that have not been completely flushed out. While an injection of cash certainly helps many organizations grow, it does not guarantee it. In fact, there are instances where the injection of cash creates more organizational hurdles for companies that were not yet ready for growth.
The Trials and Tribulations of Bootstrapping
Many new organizations are still finding their footing and bringing on investors can be scary. As a result, many organizations choose not to take on any capital, they choose to make it on their own. However, this approach has challenges of its own. Without expanding the team’s knowledge beyond the existing group, the organization is limited to the skills of the existing team.
Bootstrap to Raise Cash
While venture capital funds can be beneficial to growth, often times it glazes over the structural business problems. On the other hand, there is nobility in trying to make it on your own, but that also has limitations.
Our advice to our clients remains the same–bring on investors when you don’t need them. Run your business off cash flow and grow as the cash grows. When an investor wants to help you grow and brings capital to the table, you will get much better terms without needing the money. This route ensures that your business will never be incumbent to shareholders and their often unrealistic expectations.
If you are curious to know how to get to market without raising any venture capital money, let’s have a conversation–I bet we can help you figure it out.