BEFORE we launched finder.com in Singapore, we started out as a student credit card blog in Australia that was, ironically, bootstrapped by a credit card. Even in those early days of eating tinned spaghetti every night and not being able to pay ourselves for two years, Frank Restuccia – my fellow founder – and I funded finder out of our own pockets. From the beginning, we’ve always believed that a startup doesn’t need outside funding.
Eleven years on, we have launched globally and plan to help millions more people around the world make better decisions.
Through all this time, we’ve funded finder without any outsider intervention. There are a number of reasons why I believe in self-funding a startup over having investors. Here are my top picks.
Reason #1: Having investors doesn’t mean you have a profitable idea
You can throw money at your business, but it’s not necessarily going to make it a success.
Fundamentally, businesses are created to solve a problem. You have to work out a long-term solution for the real core of a problem, and no amount of outsider investment is going to help if you don’t have this solution.
Don’t fall into the rabbit hole of thinking that having investors means you have a profitable idea. It’s a very easy thing to think, but just look at a past startup failure, Color. It had US$41 million from investors, yet bombed when it launched. Few people downloaded the app, and fewer still found it usable. There are many other examples of this.
So, think about your business and what problem it solves. Then go out and test if your target market is interested in your idea.
Reason #2: Investors can slow down decisions
For me, the magic of co-owning a successful business comes from the day-to-day running of it. Frank and I have split up the company’s responsibilities into areas that cater to our strengths and we consult with each other on big decisions. We can take risks, test, invest in opportunities, and best of all, we can move fast.
Once you take on funding, you’re selling ownership. It’s as simple as that. When other owners are involved, it can slow down processes and decisions. Businesses can become less agile and more red tape means more hoops to jump through.
It also means that your investors could become your boss. The days of making decisions on your own are over, and investor relations is something you have to consider with every move you make.
Reason #3: Investors may have expectations of fast growth
The best way to grow a business is slowly. Especially at the beginning, when you’re building a team, a culture, and working through ideas. It’s always impressive to hear about companies that burst onto the scene with astronomical growth, but I’ve always found that it’s the ones that grow slowly which tend to win the race. Steady, constant growth is more admirable, but it can be hard getting investors to agree.
Companies that grow too fast often lack a stable foundation and do irreversible damage to their culture. Quality takes time to build.
Reason #4: There’s no right sum
I often get approached with offers and I do consider them. But, when it comes down to it, no one could pay us the right sum for what finder is truly worth to us. Our vision is to compare everything, and that concept, in and of itself, will make other companies acquisition targets. There may be a price out there, but so far, they’re just distractions from our vision.
The very nature of business means it has its ups and downs. There have been times where I’ve doubted our decision to self-fund. When you look at our competitors, they’re behemoth companies. It’s easy to feel like we don’t have enough capital to compete. But this just creates an environment for constant innovation. We’ve surmounted the insurmountable by coming up with creative solutions that win.
So don’t think the only successful companies start from angel investors or venture capital firms. Trust your gut, for self-funded companies can become profitable and win at any game.
- The writer is the CEO and co-founder of global financial comparison site finder.com, which operates in Australia, Canada, Chile, Hong Kong, Mexico, New Zealand, Singapore and Spain.
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