August 17, 2023 • 3 Min Read
It’s Not Charity, It’s an Investment Opportunity - StartEngine
Mr. Wonderful here –
Look, this is a hard truth about raising capital, but it’s something founders need to understand: Most businesses never get a cent from venture capital, angel investors, private equity…you name it, odds are they ain’t buying. In fact, 75-80% of companies in the U.S. are financed solely with founders’ savings or money from friends and family. So, if you’re raising capital, it’s all but guaranteed that you’ll have to call up people in your network and, yes, ask for money.
Nearly everyone’s done it (including me)
This is the part where I usually see a lot of founders start to squirm. Hey, I get it. I began working for myself as a teenager because I wanted total freedom to do what I want with my life without asking anybody’s permission. But betting on yourself – and inviting others to come with you – well, that’s a whole different ball game.
You wouldn’t call Mark Zuckerberg a charity case, would you? He took a $100,000 loan from his father to start Facebook. Entrepreneurs from Jeff Bezos to Phil Knight and Michael Dell have done the same. They all leaned on their network to get things running because, however big their companies are now, you better believe that institutional capital wasn’t giving them a dime in the early days.
I’m not saying that pitching investors is especially fun or easy. If you’ve watched an episode of Shark Tank, you’ve seen it often isn’t – and it can be even harder when you’re pitching people you know personally. What I am saying though is that it’s necessary. And, if you’re not willing to make the uncomfortable call, it’s time to take your startup dreams behind the barn.
What’s true for friends and family is true for your community round
Since you’re reading this on StartEngine, I’ll wager you’re at least considering equity crowdfunding. So here’s some friendly advice: what attracted me to the space in the first place is it allows you to take your customers and turn them into shareholders. That has a way of making them very loyal to your brand, which can work wonders for your customer acquisition costs and lifetime value. But – and it’s a BIG but – that won’t do you a lick of good unless you actually pitch them.
I can’t tell you how many times I’ve read a newsletter from a founder, where they bury their own investment opportunity at the very bottom of the email. As an investor what that tells me is clearly they don’t believe in their business.
Take it from me, whether it’s friends and family – or a community round on a platform like StartEngine – there’s nothing to gain from being shy about your raise. After all, it’s not charity, it’s an investment opportunity.
Kevin O’Leary is a paid spokesperson for StartEngine. View the details here.
