There's a myth going around the startup world that raising capital is everything. If you don't raise, you can't be taken seriously; and once you have raised, you're already a success and can take your foot off the gas.
This raise-or-else mantra is a destructive fallacy, and often distorts the goal of launching a startup in the first place. Rather than focus on creating a sustainable, profitable business; the emphasis is often solely on raising big amounts, from prominent investors. Sometimes you need to raise capital to create a sustainable, profitable business, but often you don't.
When you do raise, you stand to lose control of your company and must meet the aggressive expectations of Venture Capitalists. What is good enough for a solopreneur is rarely good enough for a VC firm. An impressive 84 percent of high-growth companies are built without venture money; so before you commit to running the raising gauntlet, it's worth considering your options.
1. Don't Quit Your Day Job
Before you quit, test the basics of your business while keeping your paycheck. There is a lot you can do while working full time, especially as the beginnings of a business often involve bringing in other people and putting them to work: product designers, web/app developers, legal consultants and reviewing proposals from third parties for things like warehousing, fulfillment, help desks and payroll providers. During this time, you'll also want to develop a strong business plan, a lot of which can be done in piecemeal phases. One of the benefits to not rushing through these early phases is that your concept gets the chance to marinade, evolve and develop according to all the inputs you uncover. As you write your business plan, you'll explore research, speak to experts, check in with consumers and uncover fascinating nuances in your category; this insight soup will inform your concept in ways that help to differentiate it and make it bulletproof.
2. Create A Composite Income
If you need more time than working full time allows, quit your full-time job and find a way to supplement your income. I work as an innovation consultant to support my startup endeavor Never Liked It Anyway, and know many people in a similar boat. I can continue to develop my business on my terms, yet be guaranteed an income as I go. I can ramp up my paid work depending on how demanding my business is, and respond as things change. With apps like Lyft, Turo, TutorMe, Skillshare and Upwork there are lots of ways to make a composite income. The biggest barrier is likely to be your ego responding to letting go of job security and an impressive title. Find a freelance gig (or gigs) and schedule that works for you; and get creative with it. For example, if you choose to drive a Lyft, use it as a chance to gain consumer insight, or gauge market reactions.
3. Partner Smartly
You don't have to build everything from scratch, with your own two hands. The most successful businesses occur because they are underpinned by a steady, strong and complimentary partnership. This can either come in the form of co-founders, or taking your idea to a large company and selling it directly. Finding a founder with a complimentary skill set will help take your business further, faster and also ensure that you stay accountable. Separately, partnering with a larger, established business and developing your idea or prototype through them can bypass the headache of raising capital. For this to work, you will need to have more than an idea on a piece of paper. You need to have a working prototype with proof of market demand. Most established companies are hyper aware of how quickly all categories are shifting. Add to this the difficulty of developing their own ideas into market-ready products, and it's no wonder that many larger businesses actively look for smaller ones to acquire quickly and cleanly. If you have not raised capital, these deals can be quick and painless. And you get to develop your product to its full potential, with the help of an established company with deep expertise.
4. Crowdfund What You Need
There's no shortage of ways to crowd source what you need. Not only is it a risk-free way to raise some funds, it's a chance to get some valuable product feedback. Creating a campaign that stands out on Kickstarter requires a crystal clear value proposition and an emotive articulation of why it matters. Gaining this kind of clarity is a crucial exercise for any startup, and is worth taking the time to do even if you don't end up using the platform. Try using Kickstarter, or one of its competitors like IndieGogo, Rockethub, FundAnything or Fundable, to get your product off the ground. Best of all, you'll only raise what you need; and not be left in debt or with surplus products, or undesired services on your hand.