Why we said no to $200k
A company we started forty five days ago got offered $200k in funding by a friend — we said no.
Conventional wisdom says that when you’re building a potentially large project, you must take as much money as you can
We started Synup about 45 days ago, on August 1st and have an Alpha out and possibly a beta out by the end of this month. Like all other excited founders, we went and spoke to everyone we knew about how we were working on this amazing idea that’s going to change the world.
One of these conversations ended up with someone asking us “how much” we needed to get something major out. Our answer was 200k. We got offered that money by a friend’s friend.
But, we decided not to take it. Here’s why..
We’re not comfortable getting money for a product idea that we haven’t gotten to market yet
Call us old fashioned, but it’s important to go through the cycle of build -> validate -> sell and pivot if need be. That’s how I built my previous business and it’s a mantra that all of us strongly believe in.
It’s safe to assume that the initial version of the product we create is going to require a lot of tweaking and we’re just not comfortable “pricing” or valuating a product that we have no means to.
Never take too much money from a single friend or family member
$200k is a size-able number by any means, and it doesn’t make any sense to have one single person carry the bulk of the burden associated with the uncertainty of an early stage startup.
It’s important to note that this particularly individual is/was not a professional investor and wanted to make a trust investment based on his belief that we could execute as a team.
Though we might take money from friends and family if need be, it will always be in smaller chunks of $10k -$20k each.
Early money is a double edged sword
While early money is a great asset when it comes to building something quickly, there’s also a flip-side to it.
Money in the bank makes you comfortable and gets you carried away into thinking about how you can spend the money that’s just been put into your company.
What we should be worried about right now is building a product that people will pay for and money drives us away from that just a little bit.
We really want to tough it out early
It’s important while building something to do it yourself first, just to learn the ropes and get into the “zone”.
Management, dealing with people and office space is a problem that can always be tackled later. What’s important is that we learn to tough it out early and try to make maximum use of our resources. Money isn’t going to help too much with that.
While many people have differing opinions, we believe what we did was for the greater good. What do you think?
