Getting startup funding from outside investors just got much harder this year.
Bootstrapping with self-funding and then customer-revenue funding is hard too. Pick your poison. They are both hard.
Either way, founders shouldn’t be making funding decisions based on how hard or “easy” one funding approach is over the other.
Remember “easy” VC funding and crazy-high valuations that were “cheap” for founders in 2021 and early 2022?
Most founders who took big funding back then wouldn’t say it was so easy or cheap now.
I tell founders that the default funding for SaaS startups should be self-funding:
- Don’t quit your day job.
- Fund it from your savings.
- Fund it from your business.
- Fund it with your time and frugal lifestyle.
- Fund it with your first customers paying up front.
- Fund it with services that people will pay for before it is productized.
It doesn’t take millions of dollars to build a commercial software product that customers will buy.
Building a V1 sellable product used to take a million dollar+ investment 10 or 20 years ago, but not now.
It doesn’t take millions of dollars to find customers and sell them to make those early revenues.
Reaching business customers used to take expensive marketing and serious sales teams to get going. Not anymore.
Big outside funding isn’t needed to get into revenue and get started on a growth path.
Big funding is just rocket fuel that should only be applied to 1% of software companies: those few amazing startups that can inject serious fuel/funding and INCREASE THE ODDS THAT FOUNDERS WILL WIN BIGGER.
The odds of founder success don’t increase with big funding.
2023 is proving this to be true.
All that funding wasn’t such “easy money” after all.
#practicalfounders
