Ahem, ma’am? Can you spare some loose change?
Raising capital, the bane of every startup’s existence. Which route do you go? How many different options are even out there?
The “Traditional Silicon Valley startup approach”
The academic approach to VC funding would encourage the CEO of every company to do two things: mitigate risk and raise money. Fair enough. The start-up founder/CEO spends every waking minute of his or her days going around to pitch contests and preparing financial statements all to get ready for that one meeting with that one wealthy person so they can raise all the capital of their dreams. Boom. Boatloads of cash with a financial plan that *cough cough* doesn’t mean jack. But, the wealthy person liked the person pitching so therefore they invested. BRILLIANT.
Great, that approach works like 0.01% of the time — but, when it works we get a couple of unicorns running around.
The “Blue-collar mindset, bootstrap approach”
The second option, you put on your Wrangler Five Star Premium denim jeans and hop in your regular cab pick-up truck like Ol’ Pappy and bootstrap your way to success. Never. stop. working. Avoid investors because debt is bad, other owners are bad. It’s you against the world.
Yes, that route has a higher success rate, much higher. It’s the route of every family owned business, and yes, we have a couple unicorns that took that route too. We run into a lot of businesses that are limited in their network, mainly by geography and scale. Because they avoided outside help, they struggle to grow at a rapid pace.
The “Build your network until you know literally everybody approach”
“How did you get off the ground? Friends and family seed money?” Yup. Every person out there has that wealthy uncle, friend, distant acquaintance who’s willing to funnel cash into an early stage idea, right? Wrong. But, it happens. When listening to advice from those who encourage this path, it’s hard to imagine that there are people out there willing to support on a whim, early on. If you don’t have access to capital, you don’t have access to capital and you have to choose a different path. It’s hard as a start-up founder to find that one person willing to support you financially early on.
Adapt, keep moving forward, and find what works for you
In all this, it takes a tough self-realization about the correct path to go. It’s possible to do hybrids of these models. Take advice on raising capital with a grain of pepper because those that have done it well, probably get access to cash way easier than they think. Grand Pappy would tell you to just work until you succeed, which works. However, there are smarter ways to allocate all those efforts, which is where raising capital comes in.
Work hard, meet people, listen to advice, and don’t be afraid to ask for investment. You never know who might be willing to pump a little cold green into your idea.
