Whether you’re raising money for a charitable cause or starting a new business, there’s no denying crowdfunding works. Crowdfunding is a great way to generate attention (and money) to build, launch, and promote your startup.
However, if you’re considering crowdfunding as a source of raising capital for your startup, my advice—especially in the early days of starting your business—is simple:
Go fund yourself.
Yes, funding yourself is more challenging than getting money from other people, but bootstrapping has its benefits.
Funding your own startup will help you:
- Make fewer mistakes.
When spending your own money, you tend to be a little more careful. If you fund your own startup, you’ll be more likely to proceed with caution (hopefully) and make fewer mistakes in executing your business plan.
- Build smarter, simpler products.
Scarcity creates ingenuity. When you have limited resources, you’re forced to think outside the box and come up with smarter, better ways to design, develop, and deliver your products to market. Having less money forces you to think creatively.
- Show investors you’re serious.
Ever approached an accredited investor with a new business idea? Guaranteed one of the first questions they’ll ask you is: How much of your own money have you invested? Prove to them you’re serious about your business or idea—invest your own money to get it off the ground.
- Become a better entrepreneur.
Starting a business is difficult. That’s why 80 percent of new businesses don’t make it past 18 months (source) and 96 percent fail within ten years (source). Starting a business with your own money will develop you into a different breed of entrepreneur—one who’s stronger, more resilient, and more resourceful than your competitors.You’ll also gain an invaluable and unteachable skill: grit.
If your reason for bootstrapping your startup is to retain ownership, you’re doing it wrong. Don’t get hung up on owning your startup.
Owning 100 percent of a failed startup isn’t nearly as valuable as owning 1 percent of a successful one.