What type of financing for your startup do you find most acceptable?
In the AI era, it is no longer so difficult to finance things from your own resources – bootstrapped (except for promotion or hardware-intensive solutions).
I have always saved money and tried to do things myself (what I didn't know, I learned to do to save on financial costs).
The more demanding projects often require external financing, most often VC and investors.
But to be honest (and if I wanted to save in the long run and "not owe anyone anything", it is possible that I would rather take a business loan from a bank, which I will repay at some point in my life).
Which types of financing do you find most friendly?
Is there anyone here who was lent money by family or friends to get started?
(I would like to know the extent of trust in you and your ideas they have.)
Replies
There is a fantastic book on this concept called "Getting Real." It discusses the pros and cons of bootstrapping vs raising VC money to launch.
Let me boil down the main idea. When you raise cash:
You answer to someone other than yourself
You have external pressures to grow and report profits
The customer experience is diluted
The longevity of your platform is constrained
Bootstrapping forces you to compromise with $ constraints and enables you to build organically for your ideal customer. That trust is broken when other incentives are on the line.
@blakeatvassant one downside of boot strapping is that if you have competitors with funding then they have the opportunity to outpace you. It can be great but it's also frustrating.
minimalist phone: reduce your screentime
@blakeatvassant Having money is the primary advantage that buys time. But anyway, if I had an opportunity to get money, I would rather try something where the pressure is not created by investors.
minimalist phone: reduce your screentime
@cemii What can that app do?
While I've also worked with bootstrapping so far, I'd eventually like to try the VC route at least once, or at least government programs from other organizations that are also interesting
minimalist phone: reduce your screentime
@marcelo_earth It would be faster with money in your pockets + having some advisors, but yeah, I prefer bootstrapping anyway :D
I don't have any startups, but I would probably eventually retort to my own money and a loan in a bank (I guess I could get some fairly nice amount of money given my credit history (blank :D) and my payroll being official)
minimalist phone: reduce your screentime
@sk_uxpin We are on the same boat, honestly. And paying things once is better than paying things recurrently :D
@busmark_w_nika that's exactly my feeling :D Now that you mentioned it, I'd rather not buy big things like a car or an expensive laptop/phone using loans - somehow makes me feel uncomfortable
minimalist phone: reduce your screentime
@sk_uxpin well, imagine how many people use loans for such things as basic things, "vacations, waching machine" instead of producing the value (starting a business).
@busmark_w_nika well, I can't judge them for that - you can't spend the whole life only on producing something or earning something :)
ZeroHuman.
I would take funding from government institutions. Why? Very simple. The state can be your best ally, but it can also be your biggest enemy. That is why I think this kind of institutional funding is more than welcome, especially if you are in Europe. You have the opportunity to get funding while also having your interests supported at a national level.
I see relatives as a bad option because, unless they are serious names in a given niche, they give you nothing besides cash. And ruining relationships with relatives is a nightmare to me. On top of that, can they lobby for you at a national or global level? Can they connect you with key players in the niche?
A bank is basically the same as relatives. It gives you the cash, but it has absolutely no interest in your business. It only cares about getting its payments on time. So to me, it is a bad partner. It is a cheap way to get money, but an expensive way to get connections.
VCs are a good bridge. They have both connections and money. They can lobby for you, so I see them as a pretty strong option.
minimalist phone: reduce your screentime
@byalexai I haven't been thinking about that this way. Maybe I should reconsider because of those relations. But anyway, still interested how that gov funding works because when I got like 1,200 euros, it was accompanied with so many documents. :D