Another common Office Hours question we get is should I fundraise or keep bootstrapping? Entrepreneurs have been successful on both paths, so there is not one right answer. Here are a few things to consider.

What path do you want?

Some entrepreneurs want full control. Some want a lifestyle business. Some want to grow as big and fast as they can. Only the entrepreneur can define their vision and path. However, what path you want will dictate if raising money makes sense. If you want full control and optionality to sell when you want - consider bootstrapping. If you see a massive market opportunity you want to quickly go after - consider raising money.

What are you using the money for?

A simple framework I like is: are you using the money to do more of what already is working - if so that can be a good use of money. If you are using the money to figure something out - be careful as that often burns money on an unclear timeline. I also prefer money towards sales & marketing purposes that have already been proven in early stages. Raising a lot of money for product/tech in the “build it and they will come” model carries a lot of risk.

Who is the investor?

Money is a commodity. Having the right investor on board can be a huge boost for an entrepreneur (conversely the wrong investor can be a huge drain). If you find the right investor, that can push the entrepreneur to raise some money to bring the investor on board. But be careful just taking money from anyone.

In general, we prefer bootstrapping early while you are still figuring things out. Once you get some early traction and have a better idea of what the end vision is, then evaluating fundraising paths can make more sense. Early on we encourage maintaining optionality versus committing to a path where it is still uncertain the potential outcome. Remember you can still fund your business without raising money.