Posts Tagged ‘Venture Capital’

My Bootstrap Approach to Funding My Startup Company

Tuesday, September 14th, 2010

I’ve been thinking about starting Giving Sports for a number of years. In fact, I’m sure that there were many many people that thought that I would never do it. Heck, there were times that I didn’t think I was ever going to do it. However, the previous timing was never right for me to start the startup. I’ll likely talk more about this later and why the timing is great now, but one key element to the timing is my ability to bootstrap my startup company.

I’ve been thinking a lot lately about getting funding for Giving Sports. A number of investors have been talking to me and they invariably ask the question, “Do you need some money?

That’s such a hard question to answer. I actually hate when they ask it, but it’s a genius question. Of course, EVERYONE wants money. Of course, what the investor doesn’t tell you is the cost to be able to get their money. That’s right, there’s a price you have to pay to get the money.

Evaluating the cost to get an investment in your company against the benefit of cash is an impossible math. In fact, I’d say it’s more art than science. Plus, it seems like the advice I’ve gotten over and over from investors who would never invest in my company (wrong niche, too small, etc) is to wait as long as possible to take money.

This has kind of become the theme in my various networking opportunities with investors. That along with my reading of the fantastic book Rework by the founders of 37 Signals has really pushed me to bootstrap my startup company.

I guess I’m not a total bootstrapper. In fact, the in vogue term is to call me a lean startup company. The key is that I’ve been able to self fund my startup company on the back of my blog income. I’m sure many out there are thinking that there’s no way they could do that. I didn’t think that I could do it last year either. Turns out. I can and I am doing it!

Certainly I have to be careful how much time I spend on my blogs versus on my startup company. I can see how it can easily distract me. However, it’s like everything in life that just takes balance. Plus, I’ve been thinking lately about the time cost associated with chasing capital. Not to mention that I could end up spending what amounts to a part time job chasing capital and end up with NOTHING.

This is why it’s easy for me to justify the occasional need to focus on my blogs. It’s likely much less time than I would have spent fundraising. It’s something I love to do (which I’m guessing fundraising would not fulfill). Plus, I don’t have to give up any equity in the process.

Here’s a quick look at the options:

1. Work on my blogs similar to the amount of time I would have spent raising money. Make enough money to self fund my startup doing something I love. Keep 100% of the equity in the company.

2. Work on finding funding for my startup. Possibly find no one interested in investing. If I land a nice pile of cash I have to give up 15-50% of the company (depending on a lot of factors).

Seems like a pretty clear choice to me.

I should say that I’m not against going for funding either. At some point I could see funding as a viable option. Sometimes scaling needs the cash to really grow the company. However, for now I’m quite comfortable growing organically. Isn’t organic the in thing?