Why I walked away from fundraising

I sat in the car, waiting for my daughter to finish her class. I’d been out there for 40 minutes, scribbling furiously in a small notebook, hoping I’d have time to get everything out of my head before she arrived. It was one thought that drove my urgency - I am absolutely sick of trying to raise money.

When we came up with the idea for Versapia, I couldn’t see a way to build it without a reasonable pre-seed raise. Which is crazy, really, given that fundraising has only become the default route to building a business over the last thirty years. Before then, you found customers, got a loan and hustled to survive. But now, our first thought is, how much do I need to raise?

The more I spoke to investors, the more frustrated I became. I met some fascinating people, and it wasn’t their fault - my expectations weren’t aligned with theirs. They wanted big bets on companies that already showed traction. My view was that if I had traction, I wouldn’t need their money. We were singing from different hymn sheets from the start. Every time I pitched to an investor, I couldn’t help thinking I’d rather be helping a customer. But still, I couldn’t see a different path.

Eventually, I decided to make one. I used an old coaching trick on myself, and changed the question. I asked, I know you don’t know how to build this business without raising money. But what if you did? How would you do it? I sat with that question, without writing a single word of an answer, for almost half an hour. Then, all at once, the curtain drew back and the answer became clear.

I didn’t need a fully-automated, self-contained system - at least not to start with. The value for the customer was in the result they got, not in the way it was delivered. I could build a few tools, rather than a whole platform, use others that were already available and fill in the gaps manually. It wouldn’t be perfect, but it would work.

I felt like I’d had a revelation. Like a weight had been lifted. Like the lights had finally come on.

I think we gravitate towards fundraising because it feels like the easier path. I can generate revenue once I have something to sell, we tell ourselves. But I need to build it before they’ll come. We decide that it will be simpler to convince a few investors to part with their cash on the promise of a big payoff down the road than it is to find a creative way to deliver novel value to customers with limited resources. And we’re right - often, it is easier.

The tradeoff, though, is less obvious. Constraints drive creativity. Bootstrapping forces you to evaluate every decision, develop a razor sharp business model and obsess over customer experience. It makes you focus on the detail, because it’s the only way you’ll grow. And it requires that you choose a problem to solve that the market will actually pay for.

There are, of course, some companies that need funding to get off the ground. Sometimes, to build a factory, invest in infrastructure, or overcome regulatory hurdles, investment is the only way. Mostly, though, we use it as a shortcut. I’m convinced that, as a result, we’ve ended up with people who shouldn’t really be entrepreneurs trying to scale companies that should stay small, or shouldn’t have been started in the first place.

Especially today, with all the low-cost and free resources available to us, with a small handful of exceptions if you can’t bootstrap it, it’s evidence there’s just not enough demand. Or that you haven’t got the proposition right. Or the business model needs work. Or a thousand other things - but the point still stands. Bootstrapping forces discipline that we’d rather not impose on ourselves until we have to.

There’s nothing wrong with raising money. I’m not saying we’ll never do it. But it’s crucial to question whether it’s really the right path for you and your venture, and to think very carefully about the deal you’re actually making.

So, raise if you need to. But try and figure out how you could bootstrap first. You might be surprised by the answer.

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