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The #1 Strategy for Raising Money for Your Startup

February 20th, 2010

Don’t Need it.

Seriously, that’s the entire strategy - and it’s the only one that works.

I was going to keep this blog post at 3 words long, but since blog posts are supposed to be longer than 3 words, I’ll take a few extra words to elaborate… 

Investors smell “need” like dogs smell fear.

The problem with most entrepreneurs who are caught in the pitch cycle is that they teleport their strong ”need” for the money from a mile away. They “need” the money because they can’t seem to execute without it, they “need” the money because they have grand visions that require lots of resources to bring to fruition, they “need” the money because it’s the only way to keep the lights on while things fall into place. I’ve been there, I’ve tried this approach - it’s a complete waste of time.

Instead of setting up a “need” for money, start making things happen without the money.

Meanwhile, there are other entrepreneurs who make it happen without investors. They find a way, they execute with a lean and mean team, they start proving the business model, they deliver milestones - and open up doors for the business on their own terms. Then as the business starts to succeed in its own right, they realize they:

Don’t Need the Money.

And this is the best time to talk to investors. If you can look an investor in the eye and tell them with 100% integrity that your business is going to grow with or without their money - then they will want to put their money in the business. I’ve been there, I’ve had the 100% belief (because it was based in reality), and I’ve used this to raise money that helped take a business that was already on a fast track and put it on an even faster track.

Author: Jeff D'Urso Categories: Startups Tags:
  1. February 21st, 2010 at 13:09 | #1

    Can not be more true! Although some ideas just can not take of the ground without money, this would in some way hold true again! But nevertheless finding a way for lean startup is a way better than becoming a prisoner of any investor. When you have the startup going even at a slowly-marginal pace, only then you get the grounds to bargain with investors! In any other case, they shall eat you alive, what is a frustration I do not recommend to any entrepreneur.

  2. February 23rd, 2010 at 15:09 | #2

    The good news is that these days (compared to 30 years ago) there are so many business opportunities that can be built without major amounts of capital - so even though this strategy has always held truth, it’s easier to execute now.

  3. April 23rd, 2010 at 08:14 | #3

    Excellent post! (Just found it via your linkedin profile.)

    there are two times a banker will give you time of day: when you have a million dollars plus on deposit… or when you owe him a million dollars.

    Not needing the money is the best way to get it. never wait until you need the money to get a bank loan- that is when it is hardest!

    Issamar

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