Thou Shall Not Let Investors Control Destiny

types of angel investors 4So I wrote the article last week on bootstrapping, and got a lot of emails back from Tech CEO’s…that basically said “this doesn’t work in our industry”.  Right on. I get it.  Ok.  The tech industry moves at an incredibly fast pace.

It’s a popular catch 22 founders often get stuck in.  Startup founders usually have a strong internal sense of urgency & desire for growth.  You combine this with the slow painful growth of bootstrapping, the fast pace of an industry, and it usually does not sit well with them.

I can write and circulate an article about raising money, and it will go off the shelf.  It will get spread all over the internet.  Write an article about bootstrapping, and it doesn’t do anything at all.

But here is where you’re going to hit a roadblock – –

If your company cannot make money, or if you must first reach mass scale in order to turn a profit, then you will forever be at the mercy of your investors.  As Ben Horowitz (also known to entrepreneurs as ‘that white investor that always raps’) says in Cash Flow & Destiny:

“If investors wake up one day and think you are toast, you are indeed toast.” 

That rap’n white guy is very right.  So when investors control your company, there is no way for the entrepreneur to do what entrepreneurs do best: Innovate.  Experiment.  Change.

If they want to have control over your company, then they already don’t believe in you.  Nope.  They believe in the opportunity, but they don’t believe in you.  They are already anticipating failure on your part, and a possible take over.  Before the papers are even signed.  Another possibility is they do believe in you.  But if you need money, you always have to give something for it.  Keep in mind, you only have so much company to give.

Think about that.  Don’t get so caught up in the hunt for money, that you forget why you are an entrepreneur in the first place.