Securing a huge investment from VCs at an outrageous valuation is the dream of many entrepreneurs. But, is it really the best thing that can happen to you and your start-up? How do you know if VC investment is the best for you? Do you really need VC dollars?
While the answer to the first and last questions is both ‘yes’ and ‘no’, it is more ‘no’ than ‘yes’ for most businesses. Most companies who have received VC dollars would have still survived and even thrived without it.
Venture capital investment can certainly accelerate your company’s growth and popularity but it can also set you and your team up on the highway to failure.
Here are reasons why bootstrapping is a better option for your start-up.
While definitely not the fastest route to becoming a big deal, bootstrapping allows you to take all the time you need to build your product and find a place for it in the market. This enables you to build a brand that is relatable and long lasting.
Better Focused Decision-Making
From hiring, to product development, to marketing, having little money in your purse forces you to make focused decisions. Knowing you have very little margin for error forces you to weigh options better and make better decisions.
Most VC backed companies are often guilty of having more staff on their payroll than they actually need and opting for buying their way out of problems (example, paying for an expensive TV ad rather than talking to users to figure out why sales are dropping and what they really want).
Bootstrapping is certainly no easy task but it forces the entrepreneur and the team to become more resourceful and creative in the way they think about, approach and solve problems often resulting in a company with a better customer-centered product and/or service and a relationship with their customers than a majority of VC backed businesses can boast of.