Editor’s Note: In the new podcast Masters of Scale, LinkedIn co-founder and Greylock partner Reid Hoffman explores his philosophy on how to scale a business — and at Entrepreneur.com, entrepreneurs are responding with their own ideas and experiences on our hub.This week, we’re discussing Hoffman’s theory: You need to raise more money than you think you need — and potentially a lot more. Listen to this week’s episode here.
I have bootstrapped several companies and successfully sold them. I have raised money for companies, as well as turned down money for companies. I advise a couple of VC funds in Silicon Valley on investing and have even written a guide on how to get funding for your startup.
If you are able to develop your company without raising money, then you own the whole thing and can make all the decisions you want without being beholden to someone else. If you raise money, someone else owns part of your future company, which will impact your decision.
Here’s why I chose not to raise money for some of my projects:
The projects just didn’t need it.
Yes, they took a bit longer, but I was able to fund them myself from my savings and consultancy work. I answered to no one and I kept the full value of the upside when I sold them.
Raising money takes time and effort.
Raising money is usually hard work and takes time and effort. Many startups spend too much time on early fundraising; if they focused on the company, they would have a more successful startup and might not even need to…