A popular myth these days is that successful entrepreneurs must attract investors to get their businesses going, when the reality has been that more than 80 percent of new businesses are started and grown with no outside investment at all. In fact, there is plenty of evidence that too much money can undermine a startup more quickly than squeezing pennies.
The cost of entry to entrepreneurship is lower than ever, due to smartphone apps and powerful free tools to create websites and ecommerce offerings. Yet many entrepreneurs rely on expensive outside services and outside money, rather than do the networking for a co-founder or two who have the right skills to work for equity. Bootstrapping not only reduces cash needs, but increases commitment.
Many of the best entrepreneurs I see find themselves besieged by investors, and have actively turned them away, at least until they reach a point of valuation and scaling where they don’t have to give away a lion’s share of ownership and control. Here is a summary of the top four wrong reasons I see for looking for investors:
