Two money mistakes that founding CEOs make
Raising too little. And raising too much.
The typical go-go small business goes out and raises $200,000 or $400,000 in equity, usually from friends, family and amateur investors. Maybe a bit more or less.
This is a danger zone.
This is funding for your expenses and your salary and it will rarely pay off for you or for your investors. Because, it’s worth remembering, your investors want their money back, somehow, someday soon.
If your goal is to build a significant brand, the sort of consumer products company that so many entrepreneurs dream of, you’re going to need fifty times that much before you cross the chasm.
And if you’re building a direct-marketing company, something you can bootstrap, where you sell high-value products and services to businesses and consumers in a measurable way, then you ought to be making money right from the start. Sure, you might need some equipment, but in today’s Meshed world, that’s easier than ever to outsource.
“And then a miracle occurs,” is something no fundraising entrepreneur ought to ever say.