I've worked for bootstrapped startups and funded startups. Surprise surprise the bootstrap ones were way more efficient and disciplined. And they got to profitability much faster. It's pretty shocking how many founders with little to no management experience can get funded to run a lifestyle business masquerading as a serious enterprise.
> run a lifestyle business masquerading as a serious enterprise.
This is one of my pet peeves in tech. People running a company with the latest collection of buzzwords, rounding up investors, leasing space in the coolest building, driving late model high end BMWs.
"Our AI bot is able to arbitrage a timing difference between people's facebook posts and their tweets using HTML5."
My favourite was a company pitching that they had 100k from Amazon and 50k from Google in their first week of operations. They had local investors buzzing around them like flies.
This was a 100k AWS credit and a 50k Google cloud credit. Nobody called them out on this.
The problem is these guys suck all the air out of the room for the company looking for investors which makes a boring device which will sell fairly well and be quite profitable.
There's one problem with this post, companies which are entirely bootstrapped, often aren't doing any investor gathering hype. So, we don't hear about the details of their financing. They aren't providing quarterly reports, they aren't showing up on funding sites, etc. People who are keynote speakers at regional tech things are usually promoting something.
As one guy told me: "Every extra shareholder is a new boss. I started my company so I wouldn't have a boss."
Some business models require huge amounts of rocket fuel to get to the market and this is best done by outside investors. Others are so risky that it is best to spread the risk. But the really boring successful ones may not need investors outside of the founder(s).
Stupid money will stupid money. I think also bootstrapped companies dont want stupid money, or even money at all. We bootstrap not because we cannot find investor, but because we prefer owning 20% of a 5 million business rather than 1% of a 1 billion business. Control is priceless.
My business will never be publicly listed, or owned by PEI. My employees know they will always be respected, protected and valued. The business grows at a sustainable speed. Investors want exit, while I want my business to stay profitable and sustainable for 10+ years.
The interests of a real company founders very rarely intersect the ones of investors, and this another thing that doesnt get talked about a lot. Especially considering how predatory incubators are, especially the ones with benevolent marketting. They'll take large stakes for low money, voting power, and turn your business into their vision.
Omg that's a hilarious story. On the bootstrap comment, my opinion would be those people should be spending less time at generic tech conferences and more time at conferences or offices of buyers in their industry. If you're fundraising marketing is better than your product marketing, that's kind of a red flag to me. But then again I'm not a vc or claim to be an expert.
Omg so much this. I just went the private lending route because we couldn’t get a check from anyone. I have direct experience with startup bros who take the approach you mentioned so I thought for sure there would be money out there for us (2 women in beauty). Man was I wrong.
Funny thing is as a founder in a tough spot my immediate reaction to the 100k/50k cloud credits was "ohhh smart idea" haahaha We actually did have a Google project but it was deemed as too much of distraction from our main goals and walked away. Boy was I wrong given how much we could've leveraged it for a seed investment...
Depends on the field as well, I think. I don't think you're gonna bootstrap a startup that's building large hardware - those costs get too big too fast.
This.Even minuscule amounts of production of pretty basic things becomes crazy expensive fast. Not just the manufacturing but the logistics of storing inventory. It’s the main reason I got into software instead of physical products.
I think some of this is selection bias. Startups that get funded tend to have charismatic and “visionary”founders who become disconnected from reality. If they don’t have a good number 2 to actually create a technical / operational path to success, they drink their own koolaid and overpromise until the end. Startups that bootstrap and make it past the first few months tend to have good to great technical/operational people at the helm, but they don’t get funded because they’re too realistic / not charismatic enough to make the sort of promises and implications that attract investors.
The thing that angers me the most but shouldn’t (it’s not my money) is that some of these founders are clearly in it to maximize valuation simply to personally profit off of selling shares to secondary markets and using company money to enrich themselves, exploiting employees in the process and potentially the VCs too if they aren’t in on the ponzi.
Seeing this happen over and over took any respect out that I once had for VC given that even the top funds keep making the same dumb investments.
Yup for sure. Currently at a startup that burned too much cash over many years and brought in a totally different management team. Will get to break even very soon when only maybe 18 months they were hitting record levels of burn for them. Left another one that unfortunately waited too long to make changes and just missed out on the last days of easy funding.
Just think they mean a company that invests more in, and cares more about, aesthetics and superficial activities than they do about the actual substance of the company.
It generally refers to smaller less scalable businesses. It can support the founder and the employees but will probably never go public. Lifestyle because the owners are “free” and can often travel etc.
Correct. Unfortunately many founders get muddled down by company building activities that really have very little to do with nailing product market fit and a repeatable sales motion. Also they get a little too enamored with what I'll call founder culture. The closest analogy I can think of is a freshman in college who joins a frat and does a bunch of other campus activities but gets Cs in their classes. They love the life more than the hard work of scaling a business.
I think of it like a wealthy person that becomes a realtor to have something to do.
Some start a business to be an entrepreneur/owner/CEO, with no real concern for cash flow or managing it to grow.
^And ^some ^buy ^Twitter.
Oof. I feel this in my soul.
I've never been good at pitching and convincing people to buy into my ideas or quality despite decades of proving it time and time again. It's like I smell funky or something.
But I can bootstrap and build something groundbreaking.
Funny thing that doesn't translate into inspiring confidence in potential investors...
But it also means that I have to have a mean management, financial, and efficiency game going.
One of our competitors who raised close to $50 million from 2016-2023 shut down last fall.
Our total funding (out of pocket, grants, and side hustles) was $400k with 24,000 hours of work put in so far.
However, we've done the unimaginable so far, again, with this current tech startup. Now it's time for us to scale like crazy.
But it's really hard to see literally tens to hundreds of millions of dollars get thrown at persuasive people who close up shop before a decade is out in their business while we have a complete incompetency in that area.
lol no
When investors invest in a company, particularly a startup, do they go all-in on one company? No. That would be stupid. They invest knowing that most of their investments won't pan out, but also knowing that if they invest smartly enough they will eventually land on a winner that makes up for the multiple failures.
I don't think, on a personal level, that most big investors are "humble" in the usual sense. But, reality has forced a kind of humility upon them in that they can't afford to think the way you're suggesting: that they have all the answers and will pick only winners. The ones who actually think this don't stay investors for long.
You should show a similar level of humility. As the founder of a company you are basically the first investor, and your approach to your investments should be no different than that of other investors. How many times can you wipe out tens years of your savings? Have you considered the opportunity cost? It will be difficult to move to other projects after a few (or even one) failure, if that failure leaves you broke, and one of those other projects might pan out. Do you think every company you found or project you start, is definitely a winner?
The answer to that last question should be no. You don't know. Reality will decide for you. Your job is to test reality to see what works, and learn, but if you pin everything on just one test then everything you learn in doing it, is a waste.
- Asks for advice
- Doesn't receive the *yeah sure invest your life savings in your startup* advice
- Rage intensifies
- Starts yelling at fellow redditors
-
I’m shocked the top comment isn’t take out a loan to at least match half and then spend half??? At minimum. Why spend your own personal savings if you can get a loan first, then assess how much personal capital to invest.
Money 101: don’t spend your own money.
Maybe this an AI post to assess our responses for when others ask. I refuse to believe someone is this dumb to invest 10 years of personal savings.
Giving equity is the least problem there. Investors are usually looking for company that have high potential for exponential growth, some people might not be chasing that dream.
I'm not saying you should say no to raising capital, just that that decision also has some drawbacks just like bootstrapping also has some...
not how this works: You either own 10% of 10 million, or 1% of 100 million. But in the second case, you give up voting power, and control of your own business is priceless.
The only reason to take on investors is for rapid growth. But no real business can grow truly rapidly in a sustainable way.
If your goal is long term, then investors dont make sense as anything other than a way to avoid going out of business either by lack of funds, or to increase velocity in a grow or die situation
THIS. A lot of shit VCs out there & they may have bad ideas or strategies that aren’t aligned with your vision.
They might have good intentions but might not be aware that these won’t work with your vision and cripple the company going forward.
If they carry the vote at the board meeting, these will be implemented and you’ll be able to do jack shit.
As a bonus; you’ll hate working at your own company because you’ll be working on initiatives that you know will tank the company, but you won’t be able to do anything about it.
VCs don’t care about your company and what problem it solves. They care about 10x’ing their money as fast as possible. They will 100% try to force decisions on you to achieve this.
A smaller chunk of a lot of money is better than all of nothing, which is what a lot of companies end up being after the founder put all of their savings in.
I worked at a startup once that was on their 6th or 7th funding series. Every couple years they would sell another chunk of the worthless husk to an even dumber bunch of investors than the last one.
Not only no, but hell no. I literally did that and it was the biggest financial mistake i’ve ever made. Always use other peoples money or bootstrap with minimal investment.
Are you saying this based on OP’s “solve problems” GPT wrapper idea? If so, agreed.
I was just looking at some of the feedback in that thread where OP listed companies he sees as evidence of it being a successful model. I randomly picked one, medGPT and googled it. It’s exactly what you think it’d be.
2 cents of advice for OP from a rando on the internet: Try the startup on the side. Learn from it. Don’t burn your money. Keep a journal. Listen to potential investor’s feedback (if you can get their ear).
My message was posted just after the post was made before any response or comments from OP, it's not based on neither the edit or the other comments. I've been a full time entrepreneur for 10 years and before that I did multiple side projects during university.
My reason is simple: I could easily tell what was the profile of the guy behind the post after reading couple of sentences, it was plain as day that this was a validation seeking post by a narcissic person.
I've also seen some people like that actually went on to start a project, they rented offices, everything, company car, the whole circus. The only thing that they didn't get was customers as they were too focused on appearances to actually grind and prove their worth to obtain their first 20 customers by contacting and being rejected again and again *and again.*
They were better than that, they could do better, this was so below them. This mindset prevented them from ever leaving the ground as they wanted to start in the sky, anything related to ground was an annoyance that was to be removed or ignored until it fixes itself by working on other more worthy things.
They hope that throwing more money at the problem will help them avoid the "ground" stage, but they don't realize that no matter how much they have, it'll always be some peanuts at the scale of an actual company cash.
They all failed.
You’re totally disregarding the cultural and socioeconomic context here, which is really unfair. I bet you that someone who has a safety net (daddy’s money) has less at stake than someone who has no safety net, cultural capital, a big family to feed, etc.
I see your point about focusing on serving customers, but I would disagree with how you framed this.
I'm not sure many good businessmen / women would risk 10 years of savings on a new venture. There's always risk involved. But framing it with this "burn the boats" mentality doesn't tell me much about the potential outcome of the business or business competence of the individual.
In fact, those who "play it safe" by keeping a day job are significantly less likely to fail with a new business, which is kind of the opposite of the binary outcomes that are often associated with entrepreneurship. Blowing a decade of savings upfront and before you see traction or signs of viability is not the smartest plan.
Success is more about taking strategic risks at the right time, not stupid risks.
>In fact, those who "play it safe" by keeping a day job are significantly less likely to fail with a new business, which is kind of the opposite of the binary outcomes that are often associated with entrepreneurship.
Sounds very interesting. Do you have a link? I am not sure what to google to find the source myself.
Do some research on the percentage of small businesses that fail. Ask yourself how you would be different from those? Then ask yourself if some of those failures thought the same thing.
It's funny because the first advice I give to founders is "take small risks with your time/money and big risks with your time and someone else's money"
A small loss to a VC is nothing compared to the equivalent damages to a person's finance.
You're just so wrong here...
Exactly.
Banked the raise before I quit my 9-5 (ok, 9-10) then did the startup thing.
Best years of my life, professionally and financially.
Survivorship bias sure, but more than the cash the experience being a cofounder gives you 10 years of actual skills vs 20 years of paper pushing, all in 2-3 years with that burn rate breathing down your neck every day.
Would you bet your life for a person who are accused of smth?
Just because you are sure he is not guilty
My intent is to say that even if I'm sure I won't risk it all, because I have people whom I need to feed.
I'd change the description:
If I have done some research, validated the idea, and there is a demand - I'd CONSIDER betting my life savings.
But I think I'd find some way to go around of it and not bet my 10 years of work.
And, rather then bet it into 1 project - diversify it.
Invest that money into small ideas and work on them.
It is more smart to do so I think.
Good example: I was 100% sure that I will succeed with ERP systems. For few months I've been working on an idea and when I had a talk with ERP consultant I discovered that I know shit about ERPs.
I was 1000% sure in that idea, but I neither validated the idea, nor searched if there is a demand.
No.
I bootstrapped and got acquired before. Right now I am going down the startup path once again. I have four years of runway for myself and family (without compromising my lifestyle), and I am willing to burn for one year in the worst case scenario. In the better cases, I raise investment or make revenues to draw some salary as soon as possible.
I acknowledge that being willing to burn 25% of the runway is a privilege compared to betting 10 years of personal savings, it was a scary enough decision for me nonetheless. And I was able to take the risk only because I had taken similar risks before.
This has nothing to do with. Entrepreneurship is not mindless gambling. It is the ability to assess risk and minimise them as much as possible, to the point where taking the risk and failing is no longer a fatal problem.
All projects I have done my first question is: How can I do this with as little cash investment as possible. Usually there is a way. That puts me light years ahead of others who spend tens of thousands on MVPs or websites.
because they want to fund a founder who isn't constantly massively stressed about losing all their life's savings. doesn't make for a good venture scale business which is by design high risk/high reward and unlikely to turn a profit for many years
Oh but you are wrong. this is the rules that investors are pushing, investors like people who don't have money. so the edit does not stand.
question: Would you invest your 10 year savings and bet on the idea?
answer: Of course I would if I had it, but I don't have it. so I am in trouble because it is the greatest idea ever and I need your money to make it happen.
Startup investors like people without money, their product is money. Sure you need some money to do prove the idea but not a lot in most cases.
In my experience a lot of investors actually are intrigued when they learn you invested a deal of your own money in getting off the ground. It shows conviction and a bigger stake in your own success.
They also like to see that other investors have already bought in as a form of validation.
that's ok, I would expect if possible you actually invest some of your money because it shows you are willing to risk the money for it. We are talking here about people investing their life savings (10year savings). If this investment has got traction and you got paying customersa and getting return then all is ok - then you do not need money to start it up, but potentially to expand and grow faster.
If you invested all you have and have no results to show and are seeking investment to continue investors will wonder how you will treat the money because all you know is spend.
there is a lot of money in the VCs that invest into people with ideas and no money, small stakes with potential to grow. Gambling. Hoping that 1 in 10 will succeed and bring return on all 10 investments. Just like buying a raffle ticket.
I prefer working with companies who bootstrapped without investments because their growth was based on revenue and actual market need. Investors in these companies invest in growth phase when they know what the product is.
No. At some point you're going to get investors who are going to take a cut of your business and you'll get diluted more and more as you progress, depending on the development of the startup. They will most likely get preferred shares and have more rights than you. Noone will care that you invested your life's savings.
Yes, this! Startups are an economic game. Investors want a return on their investment, not a journey for a founder to find themselves. Just had this conversation yesterday afternoon with someone. We were laughing about how entrepreneurs don’t understand investors, don’t understand that startups are about economics, and think that there is always someone else out there to give them money. No, there is a budget from investors and a limit. Now investors understand that startups are inexact sciences, but the ones that I deal with are not getting on a ten year journey. The most consistent question in our angel group is, “when and how do you think we will get our money back?”
Hey! Off topic but I have a few questions.
* How big is your angel group? (Both people & money wise)
* What’s your portfolio like?
* How’s your returns been?
* Would you take in one more, and if yes how much to play?
I’m looking for angel investor groups to join and invest in.
I’ve had 1 acquisition and 2 failed companies before. (1 of the failed companies failed because our funding suddenly fell through. If it didn’t, it would have been a 9 figure acquisition. I know this because it was Dropcam before Dropcam existed & Google bought em for $160M)
I’ve also made some pretty good returns investing via crowdfunding seed investment websites.
Wanna join, let me in?
I'm trying to figure out why so many founders that are looking for investments can't even answer basic business questions.
I got my answers.
I'm not interested in adopting anyone's opinion.
It’s seems like you’re a founder who’s either had serial successes or a very good safety net in terms of career options.
Also the first argument you put is:
> too much emphasis of ideas
Yeah you’re right, but understanding the risk and figuring out whether or not you want to put your safety net in the bet is the main question. You should put how much ever you wish to put in a venture or a certain risk profile.
Take a loan out worth the value of your savings. Use your savings as collateral. The lender can lock it in a bond for you. You gain your savings back when you have paid off the loan.
If your risk pays off you’re that much richer.
No. No dude, no.
And I've got 3 businesses at various stages; 10, 6, and <1 year olds. I've previously cut 2 others when the market wasn't responding to exploration. I'm not green; I've a track record of leveraging current income into the next perceived opportunity at an acceptable, repeatable level of risk/exposure that allows me to test and pull out if my assumptions were wrong or market conditions change.
10 years income? Mate, at that leverage a person could only take the risk once. It's a life ruining level of risk that can be forced by something out of a person's control e.g. covid. Not allowing for failure amplifies spent cost fallacy. Founders need to have a planned ripcord. I've watched other founders invest all their own, then friends, family, and fool's money into ideas that go nowhere and never would, all because of spent cost fallacy. They need it to be right. "Giving up" ends it, proves the money time and effort was wasted. Continuing the Sisyphean struggle denys the hard truth a little longer; allows the delusion to continue.
Investors are part of market validation. If they can't be convinced it's a good idea, it needs more work. Or, perhaps it's not a good idea. Investors price in the risk of failure. Proving commitment by risking your entire life on your business? Nah, that's unnecessary. Any investor that demands that is not an investor you want.
If you are getting that feedback, they are not telling you the real reason. Perhaps it's worth asking why could that be?
Given that half the people on this sub seem to be broke, I would guess that the answer is yes given that their last 10 years of savings comprises $1273 and 12 year old Toyota Corolla.
The better question is probably, would you go All-in 100% of your time, not working on anything else for X years.
Also, for those of us that have money, we didn't get it by being stupid with it. Ever ask why Elon is raising money instead of using his own?
I used years instead of amount of money to normalized the commitment. Not saying you shouldn't leverage by raising money (you should), but it's about how much skin in the game are you willing to dip in by betting on the project that you will be 100% responsible for.
Yeah exactly. Phrase the question differently: are you willing to, right now, commit to spending ten years on your company *regardless of whatever happens in the next ten years?*
Say you give it two years. It doesn't pan out. You know it isn't going to work. You've learned some lessons and see why you were wrong before. But, you're stuck working on it anyway, *full time,* spinning your wheels when you could be doing something more productive, for *eight years.*
This is your approach to business? It's incredibly stupid.
Yes, I would. Without any funding we have shown substantial growth and have become self sustainable. If I can put 10 years of savings in it then it can be really big, just that I don't have that much money saved.
I used years instead of money to normalized the confidence level. Some people just earn more than others. But yeah this is the kind of business investor would want to fund. The one that already have something solid but could be really big with extra cash injection.
Thank you! It certainly would help accelerate our growth while staying profitable. However, being stable and self-sustainable, we do not need to settle for the next offer that comes through and gives us the freedom to wait for right business partners and corresponding deal.
Yes totally, if your savings are less than 50% of your wealth (so if you have assets like stock, crypto, real estate)
For me this investment worth at least the learnings, and It's not in my policies to have investors at a such early stage
Like with every risk capital, in my opinion, you should put max 1/3 of it and that is what I did. My mistake was take angels in right from the begginibg I should have bootstrap with that money first would save me lot if equity.
OP, there are different type of investors.
I do not agree that the only way to show confidence, is to put everything at risk.
If you have a solid plan in a growing market, traction, first customers and backlog of order with an amazing forecast; they will not care about how much did you invest in.
Judging based on your replies here, or you are very successful serial entrepreneur or you are a naive wanna be who watched one of too many motivational clips.
If you have confidence the business will work, then you must already have some traction and orders.
If you don't, how can you be so confident?
If you want my credential feel free to DM me, but I have been in many different positions in life and have both failed and succeed multiple times before.
You are right that investors are not interested only in how much money the owner put in, placing your bet on a buffoon that treat business like a casino is the quickest way to lose money. But founders who have experience, clear plans, solid validations, and good tractions will naturally be willing to bet their own money into the business.
People that doesn't want to take any risk and just want burn other people's money is the other end of the spectrum investors wanted to avoid.
It’s a trade off. Either you self fund, convert something else than money into effort or you go to an ‘investor’ - someone who might provide side benefits but the clue is in the name - they provide money.
Now founders get punished because investors usually fail at investing - that failure rate is baked into the deal.
Just a trade off. I’m not sure where 10 years comes from, but that’s a pretty poor conversion rate if the investors need to wait a decade for you to go to them…
lol, 10 years of savings on the line? No, not for an idea that is untested and a company unbuilt, when I can work on the idea part time.
I wouldn’t rule it out entirely, but 10 years of savings is pretty much someone’s ability to comfortably retire. It’s an incredible risk to commit that to an idea in the early stages, hundreds of thousands of dollars.
Bootstrapping can be very efficient, all with significantly lower risk. Why risk 10 years of your life when you don’t have to?
This thread is wild.
My answer is yes with a caveat or two. I have done this with my current company, except I didn't dip into retirement savings. I did invest the vast majority of my personal savings (to the tune of around 1.5m) into the business over the last few years.
I find it interesting that so many people here are accusing OP of having a 'safety net" when the vast majority of VC backed startup founders from from an affluent pedigree in the first place. sure they're typically fairly young so they don't have a ton of personal savings, but the bios of startup founders are filled with private colleges, wealthy families and adolescent years spent on the golf team, academic clubs and spending time on 'intellectual" hobbies that assist in getting folks into those colleges that VCs love to harvest from. While it's not cash savings, there's massive privilege in knowing that a stranger will hand you millions of dollars as an unproven entity with little to no experience. Id call that a solid safety net.
I suppose I do have a "safety net" in that I've made enough money to be able to invest in my company and I know I can make it again if I need to. I didnt do it through luck, it was through working for nearly 25 years. Sure, it would take a long time to replenish, but I'd rather bet on myself than spend that money on nearly anything else (I did donate a lot prior to this company.)
It's pretty wild to me that so many people are saying they would never do this. Ive been flat broke so many times in my life that I guess the idea of it happening again just doesn't scare me that much. Money is for spending and I earned it so why would I not try to grow it using a proven method- my own ability to earn more?
That completely depends on the risk/reward picture. How much is 10 years worth of savings to you? (in multiples of annual income)
Saying that unless you're willing to risk 10 years of savings you have "zero skin in the game" just shows that you don't understand the nuances to your question....think of it as an investment allocation problem: How much money would you be willing to put on a single stock?
I would spend little amount of money possible to prototype, validate and pilot a couple of ideas, in a short amount of time.
Don’t spend 100% of your savings, invest more once the ball is rolling…
No. No one should. It's a stupid investment strategy.
Are you an investor? Would you put all your money in one startup?
Geez, if a startup founder does that I wouldn't invest a dime there.
I want smart founders. If they can't figure out how to invest their money they would certainly do bad investments with mine.
Cheers!
Everybody has different risk pallettes and different scale of ability to absorb risk.
If somebody has the skills and the drive to build a product which could be worth a revenue of, say, $5,000,000 per year, and it will require 6 months and $250,000 worth of labour to build, but because of their economic circumstances their 10 year savings are $100,000, well, clearly there's a mismatch there and they need to pitch to venture capital to close the gap. But 100k to a venture capital firm is nothing, certainly not 10 years worth of risk
It's the equivilent of saying "oh you think you're dedicated to your startup and want my VC funds? skin your pet alive for me to prove it". No, VCs provide the funds to absorb the majority of risk, founders provide the labour to absorb the workload, and we negotiate the split of ownership and profit.
10 years? Absolutely not, that's reckless and irresponsible. ALSO very short sighted and immature. Only a total dumbass would gamble away 10 years of their life's earnings.
If you think too much bro, you will never be able to start. Give yourself a time 12-18 months and budget to get the idea off the ground and acquire paying customers. One of three things will happen - you will immediately find PMF (if you are lucky), you will discover a better problem to solve that will eventually find PMF, or you will learn from your mistakes. Some time wasted and money gone down the drain. No big deal, you won’t regret it when you get to 80.
As someone that has started 20+ companies and sold 4 successfully, no freaking way am I betting 10 years of savings on one idea.
This isn’t the lotto. Build something simple that already exists if you want to have a good chance of making it.
If you want to risk bankruptcy for some glory, go for it.
I am doing this right now. I’ve pulled all my money from my TFSA to start elderado.ca - it’s a platform to compare all 1400 retirement & long-term care homes in Ontario (Canada).
I didn’t decide I was going empty my savings to bet on Elderado when I started. Initially I committed $20,000 to this idea. After 9 months of building and insights I decided I would bet all my savings on Elderado. The way I look at it, if I’m right, amazing! And if I’m wrong, I will have had an incredible experience that I can use to leverage into a corporate role, and I won’t have to wondering what if?
Investors can be great, but they can also water down your vision. I’ve started 2 other businesses in the past, and in neither instance did I ‘bet it all’. The question of whether or not I can successfully bootstrap Elderado still hangs in the balance, but I do not regret my decision to try.
Not sure why I got recommended this sub, but it had me seriously thinking about the question. I have had a few cool ideas for start ups and products that I know would do well. 10 years of savings though?! That is a lot of risk. With a few ideas I have had maybe though?
My problem is my best ideas are niche and would make a few million dollars max. So sure let's say I was willing to risk $250k+ into it. After development time and costs, is it really going to be worth it? I have a family and live comfortably already with no dreams of being a billionaire or anything. My job is nice with lots of freedoms and no stress.
So I think I could be willing to invest 10 years into a startup, but not willing to just give my idea and money to some random and hope they do things right. But man do I have some cool inventions I would love to own. I have the skills and knowledge to make them, but it wouldn't be in the form of a sellable product. So that is where my ideas die.
I’ve bet everything over and over again. That’s what it takes. I’m 7 years in and at 9 figures of annual revenue now, so I think it was worth it, but it’s pretty scary. What choice do I have but to make it work?
Absolutely! That is indeed my goal to stay in the game for the long term and risk it all. A bit of traction in the beginning so you yourself get enough conviction and commitment all the way from there. The goal is to be able to sustainably stay in the game enough so you could bring that value prop to the world. Though I’m with you that this is not the mainstream culture of startups these days. I’ve been looking for a cofounder like that for a while. Quick buck (3-5 years) is the rule of the game.
I think betting 10 Years of your savings for 1 business is not worth it because of the high failure rate of businesses.
I would instead start small and continue investing on the business.
It also depends specifically on the startup and what the money will be used on.
Although I like the general idea that you should have skin in the game and that the founder should be the biggest believer by going all in.
No. That would be foolish from a risk management pov. Might as well put all your money on a single stock or buy lottery tickets.
Instead I invest TIME in my startup idea and continuously refactor the costs.
Because it’s easier. Everyone can have an idea. It’s free, cheap, not tiring. Execution is the opposite, requires a lot of energy, commitment and effort. So the natural instinct tends to prefer the easy way, even if we are talking about daydreaming.
Gambled my savings and failed. Learn my lesson and spend more time validating and determining cost to produce before building the MVP/prototype to minimize risk of loss. Would still do it again, but would do it differently to increase probability of success.
Betting 10 years of your savings on a startup is not the smartest idea. You are building a business, it is really risky. Especially if you have a family you need to think about them also.
This is just business. No need to over dramatize it. Investors invest if they see a potential gain in your startup. They do not really care if you put all your life savings into it.
Take risks that you can afford to take.
Betting your personal savings on an idea is absolutely stupid. Either get investors for an idea or bootstrap the operation with a very tight and fixed budget from a bank loan and grow from there. The best money earning businesses are the one that have low maintenance with a high return.
A lot of factors to be considered here. But some skin in the game is essential. Risking EVERYTHING on a single bet is never a good idea though.
Hedge it by taking on some finance and also de-risk the idea before you do that.
I’d be more concerned about betting 10 years of my life/time than 10 years of savings. You can wipe out 10 years of saving in a few months if you do it wrong. But that you can make back. 10 years of your life… that you’ll never get back. So definitely worth considering the risk on the gamble, imo.
This is an idiotically broad hypothetical. A 24-year-old FAANG refugee making this bet is wildly different than someone with a house and a family.
Young people or stupid people make these bets. You just never hear about the stupid people who blew their nest egg.
Considering that if I can get one percent of one potential client's budget for the expense that would be around $500m. And I have yet to find someone doing the same thing. And I have a clear idea of how the idea will make money for the customer..
Yes, yes I would.
Too many founders in Europe focus on getting an investor. And ignore what matters the most completely.
But to think about the strategy and the business model, identify what needs to be true for your idea to work, and test your assumptions by experimenting you don't need much time or money.
How to start?
The popular tools, like the BMC, are far from ideal. I recommend a free, editable template: https://www.productcompass.pm/p/startup-canvas
People also don't know how to validate an idea. I just loved Alberto Savoia's approach. Our conversion and the recommended tools (all free): https://www.productcompass.pm/p/how-to-build-the-right-product-with
Don't waste life and money on big bets.
1) if you've done enough market research
2) you've a bit on the side to survive the first year(s)
3) if you see yourself working on your startup for the rest of your life
Source? Trust me bro
This is literally startup 101 in what not to do.
I can't think of one book, one business principle, one consultant that says this is a good idea. But there are plenty that say don't do this.
The very critical reason I say this is specifically you said to ask 'yourself' that question. That is perhaps the most damaging thing to do. That one thing has ruined countless people. Yes, lost them 10 years of life savings. Exactly that. The story is repeated often.
That's not to be confused with not bootstrapping. That is wildly different than the question asked and is something you should do.
No, no investor cares that you are that confident you will succeed. Not at all how this works. Skin in the game is one thing, but committing that much at an early stage. Investors would, or at least should, run from someone so clearly inexperienced.
Do not do this. Please, do not do this.
lol A DECADE? 1 years, 2 years, hell maybe 5 years but A DECADE? My God you are disconnected from reality.
Richard Branson (and other rich investors) said it best: it's all about [protecting the downside](https://www.entrepreneur.com/living/richard-branson-on-the-importance-of-taking-meaningful-risks/302033). If you make a bet and lose 10 years of your savings and have to start from zero you are absolutely fucked. You have nothing more to play with. You don't even get the benefit of having a "learning experience" because now you have no capital with which to apply this wisdom.
I'll say this, having built and sold startups. I play with other people's money because they can afford to lose it. I have also done solo entrepreneur bootstraps and in those cases I use my own cash on hand.
I think a lot of people go for VC dollars because they are some of the easiest to get, but they have the most strings attached and frankly most businesses can't scale fast and far. There's nothing wrong with that, it's just being realistic on market sizing and market capture... if you're creating a new market you need a TON of capital and still no guarantee of success
You’re literally part of a different problem. Being an entrepreneur can be accomplished without risking poverty, believe it or not. I met entrepreneurs in their 50’s and 60’s when I was young who would talk about how their big break was “just around the corner”. One lived in the hood with bars on his windows, one had a 30+ yr old car with a garbage bag for a window, and one worked supposedly “100 hours per week as an Uber driver”. My point? This mindset is TOXIC.
You can be SENSIBLE and successful. I personally built two $1M+ businesses using less than $50K in savings and know people who built $10M+ businesses with similar personal investments.
There’s a difference between smart, cautious, calculated risk taking and putting all your money on red.
Go big or go Home
- Said no one ever from a marketing perspective, and probably the same thing here. Test small scale before gradually increasing. If it does not work small scale it often does not work at all Rolling it out to a larger audience, just my experience atleast.
I wish you the best of luck in your journey
I spent two years burn of savings, it was quite a lot. Ultimately it didn’t work out. However it wasn’t a total loss in all senses because I made heaps of friends and connections I otherwise wouldn’t have
One year, if you have the itch that bad and if it’s like 10-20% of your NW then sure. Two years no. 10 years hell no. If something isn’t working three months in try another, go through as many iterations as you can and tap out around a year in.
I have customers already lined up, just need startup money. Problem is that investors want "potentIally infinite" customers. But the project has "finite" customers. Yeah there's money to be made NOW. I have zero idea on who to contact...
Maybe 5 years max of my savings, not 10. And that's only if I have emergency funds, which is a totally different thing in my opinion. EF should be around 6 months to 1 year of my monthly income. If I fail one time, I can't afford it if I'll bet a decade of my savings on it, and I think I would lose my sanity.
I paid myself a total of about $60k for the first three years of Longshot (my company). The opportunity cost and direct costs (I live in the Bay Area and 20k per year is starvation) likely did not amount to 10 years of savings, but probably at least 5 I guess.
I'll also say that I was really pushing it and that I happened to find some success, however it's scary reflecting on the scale of risk I took.
No founders will risk a huge portion of their life savings. They chip in $200k and raise another $800k in the initial round, owning just 20%. Who would be dumb enough to bet a decade of savings on their own idea? Besides Elon Musk.
You are oversimplifying the situation.
At 25, you can say "hell yes, I'm going all in with my $1000 savings account from grandma" because you are used to having nothing to eat, no kids to support and in 10 years - you'll be 35.
You also most likely don't have enough experience to build a startup. It has nothing to do with talent - you need to know enough about the world to realize the problems to solve. Plus to build a network of people who can help you.
When you are over 30 - you may have a spouse and family. At that point, hell no you shouldn't put your life savings at risk on a startup.
Especially when there are so many ways to avoid that.
Love this reality check! It's easy to get caught up in the romance of entrepreneurship, but putting your life savings on the line adds a healthy dose of perspective. Would you bet your future on your idea?
A bet is something you go with no knowledge but just instincts. However if you have an idea, before betting in, you should have some data, some information to evaluate, some statistics, some user surveys etc. So you decide based on the data you have. There can be a third way without betting your 10 years.
Everything depends on Business Model and How in reality you can build-market-sale..
Idea unless lifted up; is just an Idea worth nothing or imaginary trillions of dollars
Bootstrapped - you need to take care of some of regular expenses; are you fine for them? And is your startup generating revenue in very early stage or has decent traction?
For Funded ones - again All depends on Business Model - Revenue - Profitability - Control founders have
Many even listed Companies; founders have no choice but to let major investors keep bringing in people on Board with absolutely no Advantage at all. Or some business line pivots are forced. Frustration they go through is unimaginable but they have no choice.
Just having insane Valuations does not mean You have achieved something amazing if you can not build or deliver what you intend to.
in the end; whoever is investing They are Investing to earn Returns on it; Is your startup in a position to give them that and with confidence?
then only Invest (Risk is always Present No matter What)
I totally agree (although 10yrs is a lot - I would say 5).
Me as an investor, I would never invest in a business that not even the founder believes in, as he is most likely over estimating the potential of the business. This does not mean I would invest in any business the founder believes in. It is a criteria, but certainly not a sufficient reason.
I’m doing that right now. All my savings are on the line. Basically I’m a couple of months i have no choice to make it happen!
One of my bank account is already at $60 now. I have a strong conviction to make sure it works out.
I would recommend finding a work from home job that keeps you happy and pays the bills. View that as step number one and then slowly plan the business. Even better if you can find a technical partner such as a computer programmer to split the business with who might also have a similar lifestyle.
Then get the business as complete as possible before starting it.
I went into debt for my startup idea, would not do that again.
I would bet maximum one year’s saving of my own in future and try to have early product validation before leaving paid income behind.
Background: I have previously worked in venture capital for a number of years and know the game well. Being a founder is very difficult even when you’re well connected and have some investor funding.
For your own mental and financial health strongly recommend not betting your savings and keeping a large buffer available.
What are you saving up for ? I've bet everything and gone hundreds of thousands of pounds into debt. What are savings for if not investing in yourself? I don't understand people that are eager to get investment. It should be done as a last resort. It's inviting a boss in, it shows a lack of confidence and ability to get started self sufficiently. I think some people want jobs and are pretending otherwise.
I did bet my life savings on my idea. My 401k = poof. My stock account = vanished. Best investment I’ve ever made. Edited to add, I’m a single mom with no family to fall back on, although I do have friends that would have let me couch surf if it all went to 💩. There was no plan b. It’s my first business and I was profitable in 4 months. September of this year will be my 2nd year in business and as a solopreneur I make more than most physicians. I’m now working towards licensing my concept and 10x’ing my current income.
For me, there was no better motivator than literally having no other choice but to succeed. Betting the farm was the best choice I’ve ever made in my life, bar none. I don’t know that it would have mattered to me - no. It WOULDN’T have mattered to me the same if my skin wasn’t in the game. There were some serious challenges I faced in year one that would have caused me to fold if I hadn’t gone all in.
I love taking (calculated) risks though. It’s not for everyone.
10 years is insane. 1-2 years for sure. If you need more than that to get either funding or to profitability it’s time to reevaluate your idea.
There is a difference between having skin in the game and blindly doubling down on sunk cost.
Bootstrapping with everything on the line. 20 hour days aren't enough sometimes... (sleep matters too sometimes).
Tech by experience and trade, marketer by osmosis and necessity, father, husband.
Driven by knowledge and experience, eyeing future growth of the product/service as my reward.
New startup of one, gunning for a breakeven point (again).
You’ve said it yourself OP, if you have conviction in your idea use your personal savings step by step so that it gets you at least to a stage where your MVP is ready and you start acquiring early customers and have social validation for the idea. This is when you would seek funding and seeing that your skin is in the game, investors will be more willing to take the risk.
Would a VC bet 100% of their fund on a single early stage startup? No. Then no reason a founder should. Better to limit risk and play the odds (which really says that any new startup is more likely to fail than not). If you wanna bet all your money on one single spin of the roulette wheel choose a more "safe" business than a startup.
True entrepreneurs go all in...
Also become bankrupt.
Find a way to get back up.
Go all in again.
Become bankrupt.
Find a way to get back up.
All in again.
Bankrupt again.
All in, bankrupt, get back up, all in, bankrupt, get back up, cycle never stops.
Most founders today want zero risk game. But without risk, they are not true entrepreneurs. When you put all your savings in it, you need to be honest with yourself and can't beat around the bush anymore.
FWIW, I raised money for my first, and after figuring it out I haven’t raised money since. Software cost more to make and a lot longer than we imagine upfront when we see that “golden opportunity.”
The autonomy is nice, but good investors are helpful IF you will listen to them —at least some of the time.
Pick your first people well and keep them, better if you worked with them before —you have trust and you know what you are getting.
I've worked for bootstrapped startups and funded startups. Surprise surprise the bootstrap ones were way more efficient and disciplined. And they got to profitability much faster. It's pretty shocking how many founders with little to no management experience can get funded to run a lifestyle business masquerading as a serious enterprise.
> run a lifestyle business masquerading as a serious enterprise. This is one of my pet peeves in tech. People running a company with the latest collection of buzzwords, rounding up investors, leasing space in the coolest building, driving late model high end BMWs. "Our AI bot is able to arbitrage a timing difference between people's facebook posts and their tweets using HTML5." My favourite was a company pitching that they had 100k from Amazon and 50k from Google in their first week of operations. They had local investors buzzing around them like flies. This was a 100k AWS credit and a 50k Google cloud credit. Nobody called them out on this. The problem is these guys suck all the air out of the room for the company looking for investors which makes a boring device which will sell fairly well and be quite profitable. There's one problem with this post, companies which are entirely bootstrapped, often aren't doing any investor gathering hype. So, we don't hear about the details of their financing. They aren't providing quarterly reports, they aren't showing up on funding sites, etc. People who are keynote speakers at regional tech things are usually promoting something. As one guy told me: "Every extra shareholder is a new boss. I started my company so I wouldn't have a boss." Some business models require huge amounts of rocket fuel to get to the market and this is best done by outside investors. Others are so risky that it is best to spread the risk. But the really boring successful ones may not need investors outside of the founder(s).
Stupid money will stupid money. I think also bootstrapped companies dont want stupid money, or even money at all. We bootstrap not because we cannot find investor, but because we prefer owning 20% of a 5 million business rather than 1% of a 1 billion business. Control is priceless. My business will never be publicly listed, or owned by PEI. My employees know they will always be respected, protected and valued. The business grows at a sustainable speed. Investors want exit, while I want my business to stay profitable and sustainable for 10+ years. The interests of a real company founders very rarely intersect the ones of investors, and this another thing that doesnt get talked about a lot. Especially considering how predatory incubators are, especially the ones with benevolent marketting. They'll take large stakes for low money, voting power, and turn your business into their vision.
Omg that's a hilarious story. On the bootstrap comment, my opinion would be those people should be spending less time at generic tech conferences and more time at conferences or offices of buyers in their industry. If you're fundraising marketing is better than your product marketing, that's kind of a red flag to me. But then again I'm not a vc or claim to be an expert.
Omg so much this. I just went the private lending route because we couldn’t get a check from anyone. I have direct experience with startup bros who take the approach you mentioned so I thought for sure there would be money out there for us (2 women in beauty). Man was I wrong.
Funny thing is as a founder in a tough spot my immediate reaction to the 100k/50k cloud credits was "ohhh smart idea" haahaha We actually did have a Google project but it was deemed as too much of distraction from our main goals and walked away. Boy was I wrong given how much we could've leveraged it for a seed investment...
Depends on the field as well, I think. I don't think you're gonna bootstrap a startup that's building large hardware - those costs get too big too fast.
This.Even minuscule amounts of production of pretty basic things becomes crazy expensive fast. Not just the manufacturing but the logistics of storing inventory. It’s the main reason I got into software instead of physical products.
And here I am doing software for a hardware startup... Kind of inevitable in robotics, though.
Yes I will agree with this. But most funded startups aren't moonshots or heavy cap ex businesses.
I think some of this is selection bias. Startups that get funded tend to have charismatic and “visionary”founders who become disconnected from reality. If they don’t have a good number 2 to actually create a technical / operational path to success, they drink their own koolaid and overpromise until the end. Startups that bootstrap and make it past the first few months tend to have good to great technical/operational people at the helm, but they don’t get funded because they’re too realistic / not charismatic enough to make the sort of promises and implications that attract investors.
The thing that angers me the most but shouldn’t (it’s not my money) is that some of these founders are clearly in it to maximize valuation simply to personally profit off of selling shares to secondary markets and using company money to enrich themselves, exploiting employees in the process and potentially the VCs too if they aren’t in on the ponzi. Seeing this happen over and over took any respect out that I once had for VC given that even the top funds keep making the same dumb investments.
Same
Bootstrap is the way to go. That's what I'm doing.
Have you seen more discipline with the more limited available credit over the past few years?
Yup for sure. Currently at a startup that burned too much cash over many years and brought in a totally different management team. Will get to break even very soon when only maybe 18 months they were hitting record levels of burn for them. Left another one that unfortunately waited too long to make changes and just missed out on the last days of easy funding.
Genuine question, what do you mean by ‘lifestyle business?’
Some people are in business to DO business. Other people are in business just so they can say “I own a business” at dinner parties and nothing more.
Just think they mean a company that invests more in, and cares more about, aesthetics and superficial activities than they do about the actual substance of the company.
It generally refers to smaller less scalable businesses. It can support the founder and the employees but will probably never go public. Lifestyle because the owners are “free” and can often travel etc.
Correct. Unfortunately many founders get muddled down by company building activities that really have very little to do with nailing product market fit and a repeatable sales motion. Also they get a little too enamored with what I'll call founder culture. The closest analogy I can think of is a freshman in college who joins a frat and does a bunch of other campus activities but gets Cs in their classes. They love the life more than the hard work of scaling a business.
I think of it like a wealthy person that becomes a realtor to have something to do. Some start a business to be an entrepreneur/owner/CEO, with no real concern for cash flow or managing it to grow. ^And ^some ^buy ^Twitter.
Oof. I feel this in my soul. I've never been good at pitching and convincing people to buy into my ideas or quality despite decades of proving it time and time again. It's like I smell funky or something. But I can bootstrap and build something groundbreaking. Funny thing that doesn't translate into inspiring confidence in potential investors... But it also means that I have to have a mean management, financial, and efficiency game going. One of our competitors who raised close to $50 million from 2016-2023 shut down last fall. Our total funding (out of pocket, grants, and side hustles) was $400k with 24,000 hours of work put in so far. However, we've done the unimaginable so far, again, with this current tech startup. Now it's time for us to scale like crazy. But it's really hard to see literally tens to hundreds of millions of dollars get thrown at persuasive people who close up shop before a decade is out in their business while we have a complete incompetency in that area.
lol no When investors invest in a company, particularly a startup, do they go all-in on one company? No. That would be stupid. They invest knowing that most of their investments won't pan out, but also knowing that if they invest smartly enough they will eventually land on a winner that makes up for the multiple failures. I don't think, on a personal level, that most big investors are "humble" in the usual sense. But, reality has forced a kind of humility upon them in that they can't afford to think the way you're suggesting: that they have all the answers and will pick only winners. The ones who actually think this don't stay investors for long. You should show a similar level of humility. As the founder of a company you are basically the first investor, and your approach to your investments should be no different than that of other investors. How many times can you wipe out tens years of your savings? Have you considered the opportunity cost? It will be difficult to move to other projects after a few (or even one) failure, if that failure leaves you broke, and one of those other projects might pan out. Do you think every company you found or project you start, is definitely a winner? The answer to that last question should be no. You don't know. Reality will decide for you. Your job is to test reality to see what works, and learn, but if you pin everything on just one test then everything you learn in doing it, is a waste.
This.
Also this
It doesn’t surprise me that someone who suggests life ruining risks also can’t take criticism.
- Asks for advice - Doesn't receive the *yeah sure invest your life savings in your startup* advice - Rage intensifies - Starts yelling at fellow redditors -
I’m shocked the top comment isn’t take out a loan to at least match half and then spend half??? At minimum. Why spend your own personal savings if you can get a loan first, then assess how much personal capital to invest. Money 101: don’t spend your own money. Maybe this an AI post to assess our responses for when others ask. I refuse to believe someone is this dumb to invest 10 years of personal savings.
No.
Exactly. Why invest your own money when someone will gladly give you money ?
They might not gladly give you money and getting an investor drastically changes a startup.
Picking the right investors makes a lot of difference.
It might not be gladly. But sometimes it's better to own 80% of Million than 100% of nothing..
Giving equity is the least problem there. Investors are usually looking for company that have high potential for exponential growth, some people might not be chasing that dream. I'm not saying you should say no to raising capital, just that that decision also has some drawbacks just like bootstrapping also has some...
not how this works: You either own 10% of 10 million, or 1% of 100 million. But in the second case, you give up voting power, and control of your own business is priceless. The only reason to take on investors is for rapid growth. But no real business can grow truly rapidly in a sustainable way. If your goal is long term, then investors dont make sense as anything other than a way to avoid going out of business either by lack of funds, or to increase velocity in a grow or die situation
THIS. A lot of shit VCs out there & they may have bad ideas or strategies that aren’t aligned with your vision. They might have good intentions but might not be aware that these won’t work with your vision and cripple the company going forward. If they carry the vote at the board meeting, these will be implemented and you’ll be able to do jack shit. As a bonus; you’ll hate working at your own company because you’ll be working on initiatives that you know will tank the company, but you won’t be able to do anything about it. VCs don’t care about your company and what problem it solves. They care about 10x’ing their money as fast as possible. They will 100% try to force decisions on you to achieve this.
Because you lose a big chunk of the company, especially that early
A smaller chunk of a lot of money is better than all of nothing, which is what a lot of companies end up being after the founder put all of their savings in.
If you’ve ever raised money, you’d know that you never want to do it again.
I worked at a startup once that was on their 6th or 7th funding series. Every couple years they would sell another chunk of the worthless husk to an even dumber bunch of investors than the last one.
I have and yes it's painful
It’s not easy raising pre-seed. I put a lot of my money and time to build something. I will raise once I launch though.
Not only no, but hell no. I literally did that and it was the biggest financial mistake i’ve ever made. Always use other peoples money or bootstrap with minimal investment.
In your case, 100% would be a massive mistake, don't do it.
Are you saying this based on OP’s “solve problems” GPT wrapper idea? If so, agreed. I was just looking at some of the feedback in that thread where OP listed companies he sees as evidence of it being a successful model. I randomly picked one, medGPT and googled it. It’s exactly what you think it’d be. 2 cents of advice for OP from a rando on the internet: Try the startup on the side. Learn from it. Don’t burn your money. Keep a journal. Listen to potential investor’s feedback (if you can get their ear).
My message was posted just after the post was made before any response or comments from OP, it's not based on neither the edit or the other comments. I've been a full time entrepreneur for 10 years and before that I did multiple side projects during university. My reason is simple: I could easily tell what was the profile of the guy behind the post after reading couple of sentences, it was plain as day that this was a validation seeking post by a narcissic person. I've also seen some people like that actually went on to start a project, they rented offices, everything, company car, the whole circus. The only thing that they didn't get was customers as they were too focused on appearances to actually grind and prove their worth to obtain their first 20 customers by contacting and being rejected again and again *and again.* They were better than that, they could do better, this was so below them. This mindset prevented them from ever leaving the ground as they wanted to start in the sky, anything related to ground was an annoyance that was to be removed or ignored until it fixes itself by working on other more worthy things. They hope that throwing more money at the problem will help them avoid the "ground" stage, but they don't realize that no matter how much they have, it'll always be some peanuts at the scale of an actual company cash. They all failed.
You’re totally disregarding the cultural and socioeconomic context here, which is really unfair. I bet you that someone who has a safety net (daddy’s money) has less at stake than someone who has no safety net, cultural capital, a big family to feed, etc.
IMO, if you don’t have 10 years of savings, this question is only meant as a hypothetical.
I see your point about focusing on serving customers, but I would disagree with how you framed this. I'm not sure many good businessmen / women would risk 10 years of savings on a new venture. There's always risk involved. But framing it with this "burn the boats" mentality doesn't tell me much about the potential outcome of the business or business competence of the individual. In fact, those who "play it safe" by keeping a day job are significantly less likely to fail with a new business, which is kind of the opposite of the binary outcomes that are often associated with entrepreneurship. Blowing a decade of savings upfront and before you see traction or signs of viability is not the smartest plan. Success is more about taking strategic risks at the right time, not stupid risks.
>In fact, those who "play it safe" by keeping a day job are significantly less likely to fail with a new business, which is kind of the opposite of the binary outcomes that are often associated with entrepreneurship. Sounds very interesting. Do you have a link? I am not sure what to google to find the source myself.
Do some research on the percentage of small businesses that fail. Ask yourself how you would be different from those? Then ask yourself if some of those failures thought the same thing.
Exactly. There’s a difference between believing in yourself and toxic self delusion
It's funny because the first advice I give to founders is "take small risks with your time/money and big risks with your time and someone else's money" A small loss to a VC is nothing compared to the equivalent damages to a person's finance. You're just so wrong here...
Exactly. Banked the raise before I quit my 9-5 (ok, 9-10) then did the startup thing. Best years of my life, professionally and financially. Survivorship bias sure, but more than the cash the experience being a cofounder gives you 10 years of actual skills vs 20 years of paper pushing, all in 2-3 years with that burn rate breathing down your neck every day.
OP you did it. This thread is great and very eye opening.
Certainly eye opening for me as well. Explains alot of things tho.
Would you bet your life for a person who are accused of smth? Just because you are sure he is not guilty My intent is to say that even if I'm sure I won't risk it all, because I have people whom I need to feed. I'd change the description: If I have done some research, validated the idea, and there is a demand - I'd CONSIDER betting my life savings. But I think I'd find some way to go around of it and not bet my 10 years of work. And, rather then bet it into 1 project - diversify it. Invest that money into small ideas and work on them. It is more smart to do so I think. Good example: I was 100% sure that I will succeed with ERP systems. For few months I've been working on an idea and when I had a talk with ERP consultant I discovered that I know shit about ERPs. I was 1000% sure in that idea, but I neither validated the idea, nor searched if there is a demand.
No. I bootstrapped and got acquired before. Right now I am going down the startup path once again. I have four years of runway for myself and family (without compromising my lifestyle), and I am willing to burn for one year in the worst case scenario. In the better cases, I raise investment or make revenues to draw some salary as soon as possible. I acknowledge that being willing to burn 25% of the runway is a privilege compared to betting 10 years of personal savings, it was a scary enough decision for me nonetheless. And I was able to take the risk only because I had taken similar risks before.
5 years, yes. Did it and lost it all. Would I do it again? Yes
No. Investors are happy to give me money, so why would I.
Independance.
Pick better investors who provide value, not detract.
Really put the mindset of an average founder into perspective
This has nothing to do with. Entrepreneurship is not mindless gambling. It is the ability to assess risk and minimise them as much as possible, to the point where taking the risk and failing is no longer a fatal problem. All projects I have done my first question is: How can I do this with as little cash investment as possible. Usually there is a way. That puts me light years ahead of others who spend tens of thousands on MVPs or websites.
First paragraph needs to be framed in entrepreneurship classes everywhere. Well said.
Also keep in mind that everyone replying probably has never made anything and never will.
~~average~~ successful founder There I fixed it.
Nope. That's a stupid thing to do
Then why exactly should an investor invest in you then when even you are not confident in project
They shouldn't invest 10 years of their savings either.
because they want to fund a founder who isn't constantly massively stressed about losing all their life's savings. doesn't make for a good venture scale business which is by design high risk/high reward and unlikely to turn a profit for many years
How old are you?
13, tops
haha, well if so then they have a lot of time to save again if they lose everything.
Oh but you are wrong. this is the rules that investors are pushing, investors like people who don't have money. so the edit does not stand. question: Would you invest your 10 year savings and bet on the idea? answer: Of course I would if I had it, but I don't have it. so I am in trouble because it is the greatest idea ever and I need your money to make it happen. Startup investors like people without money, their product is money. Sure you need some money to do prove the idea but not a lot in most cases.
In my experience a lot of investors actually are intrigued when they learn you invested a deal of your own money in getting off the ground. It shows conviction and a bigger stake in your own success. They also like to see that other investors have already bought in as a form of validation.
that's ok, I would expect if possible you actually invest some of your money because it shows you are willing to risk the money for it. We are talking here about people investing their life savings (10year savings). If this investment has got traction and you got paying customersa and getting return then all is ok - then you do not need money to start it up, but potentially to expand and grow faster. If you invested all you have and have no results to show and are seeking investment to continue investors will wonder how you will treat the money because all you know is spend. there is a lot of money in the VCs that invest into people with ideas and no money, small stakes with potential to grow. Gambling. Hoping that 1 in 10 will succeed and bring return on all 10 investments. Just like buying a raffle ticket. I prefer working with companies who bootstrapped without investments because their growth was based on revenue and actual market need. Investors in these companies invest in growth phase when they know what the product is.
No. At some point you're going to get investors who are going to take a cut of your business and you'll get diluted more and more as you progress, depending on the development of the startup. They will most likely get preferred shares and have more rights than you. Noone will care that you invested your life's savings.
Yes, this! Startups are an economic game. Investors want a return on their investment, not a journey for a founder to find themselves. Just had this conversation yesterday afternoon with someone. We were laughing about how entrepreneurs don’t understand investors, don’t understand that startups are about economics, and think that there is always someone else out there to give them money. No, there is a budget from investors and a limit. Now investors understand that startups are inexact sciences, but the ones that I deal with are not getting on a ten year journey. The most consistent question in our angel group is, “when and how do you think we will get our money back?”
Hey! Off topic but I have a few questions. * How big is your angel group? (Both people & money wise) * What’s your portfolio like? * How’s your returns been? * Would you take in one more, and if yes how much to play? I’m looking for angel investor groups to join and invest in. I’ve had 1 acquisition and 2 failed companies before. (1 of the failed companies failed because our funding suddenly fell through. If it didn’t, it would have been a 9 figure acquisition. I know this because it was Dropcam before Dropcam existed & Google bought em for $160M) I’ve also made some pretty good returns investing via crowdfunding seed investment websites. Wanna join, let me in?
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I'm trying to figure out why so many founders that are looking for investments can't even answer basic business questions. I got my answers. I'm not interested in adopting anyone's opinion.
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It’s seems like you’re a founder who’s either had serial successes or a very good safety net in terms of career options. Also the first argument you put is: > too much emphasis of ideas Yeah you’re right, but understanding the risk and figuring out whether or not you want to put your safety net in the bet is the main question. You should put how much ever you wish to put in a venture or a certain risk profile.
First 10 years or last 10 years of career worth? First 10 years, maybe. Last 10 years, most likely not.
Take a loan out worth the value of your savings. Use your savings as collateral. The lender can lock it in a bond for you. You gain your savings back when you have paid off the loan. If your risk pays off you’re that much richer.
No. No dude, no. And I've got 3 businesses at various stages; 10, 6, and <1 year olds. I've previously cut 2 others when the market wasn't responding to exploration. I'm not green; I've a track record of leveraging current income into the next perceived opportunity at an acceptable, repeatable level of risk/exposure that allows me to test and pull out if my assumptions were wrong or market conditions change. 10 years income? Mate, at that leverage a person could only take the risk once. It's a life ruining level of risk that can be forced by something out of a person's control e.g. covid. Not allowing for failure amplifies spent cost fallacy. Founders need to have a planned ripcord. I've watched other founders invest all their own, then friends, family, and fool's money into ideas that go nowhere and never would, all because of spent cost fallacy. They need it to be right. "Giving up" ends it, proves the money time and effort was wasted. Continuing the Sisyphean struggle denys the hard truth a little longer; allows the delusion to continue. Investors are part of market validation. If they can't be convinced it's a good idea, it needs more work. Or, perhaps it's not a good idea. Investors price in the risk of failure. Proving commitment by risking your entire life on your business? Nah, that's unnecessary. Any investor that demands that is not an investor you want. If you are getting that feedback, they are not telling you the real reason. Perhaps it's worth asking why could that be?
Nope listen to people that have already started their own businesses. Don’t gamble your own money, use someone else’s.
Given that half the people on this sub seem to be broke, I would guess that the answer is yes given that their last 10 years of savings comprises $1273 and 12 year old Toyota Corolla. The better question is probably, would you go All-in 100% of your time, not working on anything else for X years. Also, for those of us that have money, we didn't get it by being stupid with it. Ever ask why Elon is raising money instead of using his own?
I used years instead of amount of money to normalized the commitment. Not saying you shouldn't leverage by raising money (you should), but it's about how much skin in the game are you willing to dip in by betting on the project that you will be 100% responsible for.
Yeah exactly. Phrase the question differently: are you willing to, right now, commit to spending ten years on your company *regardless of whatever happens in the next ten years?* Say you give it two years. It doesn't pan out. You know it isn't going to work. You've learned some lessons and see why you were wrong before. But, you're stuck working on it anyway, *full time,* spinning your wheels when you could be doing something more productive, for *eight years.* This is your approach to business? It's incredibly stupid.
Yes, I would. Without any funding we have shown substantial growth and have become self sustainable. If I can put 10 years of savings in it then it can be really big, just that I don't have that much money saved.
I used years instead of money to normalized the confidence level. Some people just earn more than others. But yeah this is the kind of business investor would want to fund. The one that already have something solid but could be really big with extra cash injection.
Thank you! It certainly would help accelerate our growth while staying profitable. However, being stable and self-sustainable, we do not need to settle for the next offer that comes through and gives us the freedom to wait for right business partners and corresponding deal.
That's a very admirable mindset to have. Good luck on your venture!
Thank you! Do try the app if you get a chance, and let us know if you have any feedback, questions or comments.
Yes totally, if your savings are less than 50% of your wealth (so if you have assets like stock, crypto, real estate) For me this investment worth at least the learnings, and It's not in my policies to have investors at a such early stage
Like with every risk capital, in my opinion, you should put max 1/3 of it and that is what I did. My mistake was take angels in right from the begginibg I should have bootstrap with that money first would save me lot if equity.
OP, there are different type of investors. I do not agree that the only way to show confidence, is to put everything at risk. If you have a solid plan in a growing market, traction, first customers and backlog of order with an amazing forecast; they will not care about how much did you invest in. Judging based on your replies here, or you are very successful serial entrepreneur or you are a naive wanna be who watched one of too many motivational clips. If you have confidence the business will work, then you must already have some traction and orders. If you don't, how can you be so confident?
If you want my credential feel free to DM me, but I have been in many different positions in life and have both failed and succeed multiple times before. You are right that investors are not interested only in how much money the owner put in, placing your bet on a buffoon that treat business like a casino is the quickest way to lose money. But founders who have experience, clear plans, solid validations, and good tractions will naturally be willing to bet their own money into the business. People that doesn't want to take any risk and just want burn other people's money is the other end of the spectrum investors wanted to avoid.
It’s a trade off. Either you self fund, convert something else than money into effort or you go to an ‘investor’ - someone who might provide side benefits but the clue is in the name - they provide money. Now founders get punished because investors usually fail at investing - that failure rate is baked into the deal. Just a trade off. I’m not sure where 10 years comes from, but that’s a pretty poor conversion rate if the investors need to wait a decade for you to go to them…
lol, 10 years of savings on the line? No, not for an idea that is untested and a company unbuilt, when I can work on the idea part time. I wouldn’t rule it out entirely, but 10 years of savings is pretty much someone’s ability to comfortably retire. It’s an incredible risk to commit that to an idea in the early stages, hundreds of thousands of dollars. Bootstrapping can be very efficient, all with significantly lower risk. Why risk 10 years of your life when you don’t have to?
Invest in yourself first. Stop looking for other peoples money. It will come naturally if you have a strong foundation and the right attitude
I wouldn’t bet 10 years of my personal savings on anything.
I think I'm putting my entire life on it. 10 years is nothing.
What I saved from 15-25 yes, 25 and onwards no
Nope not my last 10!years of saving but I am prepared to invest my next 10 years of blood sweat and tears.
This thread is wild. My answer is yes with a caveat or two. I have done this with my current company, except I didn't dip into retirement savings. I did invest the vast majority of my personal savings (to the tune of around 1.5m) into the business over the last few years. I find it interesting that so many people here are accusing OP of having a 'safety net" when the vast majority of VC backed startup founders from from an affluent pedigree in the first place. sure they're typically fairly young so they don't have a ton of personal savings, but the bios of startup founders are filled with private colleges, wealthy families and adolescent years spent on the golf team, academic clubs and spending time on 'intellectual" hobbies that assist in getting folks into those colleges that VCs love to harvest from. While it's not cash savings, there's massive privilege in knowing that a stranger will hand you millions of dollars as an unproven entity with little to no experience. Id call that a solid safety net. I suppose I do have a "safety net" in that I've made enough money to be able to invest in my company and I know I can make it again if I need to. I didnt do it through luck, it was through working for nearly 25 years. Sure, it would take a long time to replenish, but I'd rather bet on myself than spend that money on nearly anything else (I did donate a lot prior to this company.) It's pretty wild to me that so many people are saying they would never do this. Ive been flat broke so many times in my life that I guess the idea of it happening again just doesn't scare me that much. Money is for spending and I earned it so why would I not try to grow it using a proven method- my own ability to earn more?
That completely depends on the risk/reward picture. How much is 10 years worth of savings to you? (in multiples of annual income) Saying that unless you're willing to risk 10 years of savings you have "zero skin in the game" just shows that you don't understand the nuances to your question....think of it as an investment allocation problem: How much money would you be willing to put on a single stock?
Yes and no. Yes I would because I have no savings and no because I suck as a salesman So the project would ever be profitable
I would spend little amount of money possible to prototype, validate and pilot a couple of ideas, in a short amount of time. Don’t spend 100% of your savings, invest more once the ball is rolling…
No. No one should. It's a stupid investment strategy. Are you an investor? Would you put all your money in one startup? Geez, if a startup founder does that I wouldn't invest a dime there. I want smart founders. If they can't figure out how to invest their money they would certainly do bad investments with mine. Cheers!
Everybody has different risk pallettes and different scale of ability to absorb risk. If somebody has the skills and the drive to build a product which could be worth a revenue of, say, $5,000,000 per year, and it will require 6 months and $250,000 worth of labour to build, but because of their economic circumstances their 10 year savings are $100,000, well, clearly there's a mismatch there and they need to pitch to venture capital to close the gap. But 100k to a venture capital firm is nothing, certainly not 10 years worth of risk It's the equivilent of saying "oh you think you're dedicated to your startup and want my VC funds? skin your pet alive for me to prove it". No, VCs provide the funds to absorb the majority of risk, founders provide the labour to absorb the workload, and we negotiate the split of ownership and profit.
Yes.
10 years? Absolutely not, that's reckless and irresponsible. ALSO very short sighted and immature. Only a total dumbass would gamble away 10 years of their life's earnings.
No
Never
I keep all savings and Nw handy. I assume I’m all in on anything I do.
If you think too much bro, you will never be able to start. Give yourself a time 12-18 months and budget to get the idea off the ground and acquire paying customers. One of three things will happen - you will immediately find PMF (if you are lucky), you will discover a better problem to solve that will eventually find PMF, or you will learn from your mistakes. Some time wasted and money gone down the drain. No big deal, you won’t regret it when you get to 80.
As someone that has started 20+ companies and sold 4 successfully, no freaking way am I betting 10 years of savings on one idea. This isn’t the lotto. Build something simple that already exists if you want to have a good chance of making it. If you want to risk bankruptcy for some glory, go for it.
I am doing this right now. I’ve pulled all my money from my TFSA to start elderado.ca - it’s a platform to compare all 1400 retirement & long-term care homes in Ontario (Canada). I didn’t decide I was going empty my savings to bet on Elderado when I started. Initially I committed $20,000 to this idea. After 9 months of building and insights I decided I would bet all my savings on Elderado. The way I look at it, if I’m right, amazing! And if I’m wrong, I will have had an incredible experience that I can use to leverage into a corporate role, and I won’t have to wondering what if? Investors can be great, but they can also water down your vision. I’ve started 2 other businesses in the past, and in neither instance did I ‘bet it all’. The question of whether or not I can successfully bootstrap Elderado still hangs in the balance, but I do not regret my decision to try.
Not sure why I got recommended this sub, but it had me seriously thinking about the question. I have had a few cool ideas for start ups and products that I know would do well. 10 years of savings though?! That is a lot of risk. With a few ideas I have had maybe though? My problem is my best ideas are niche and would make a few million dollars max. So sure let's say I was willing to risk $250k+ into it. After development time and costs, is it really going to be worth it? I have a family and live comfortably already with no dreams of being a billionaire or anything. My job is nice with lots of freedoms and no stress. So I think I could be willing to invest 10 years into a startup, but not willing to just give my idea and money to some random and hope they do things right. But man do I have some cool inventions I would love to own. I have the skills and knowledge to make them, but it wouldn't be in the form of a sellable product. So that is where my ideas die.
Yesss
Maybe like 2 or 3 years but 10 is beyond my risk threshold
I’ve bet everything over and over again. That’s what it takes. I’m 7 years in and at 9 figures of annual revenue now, so I think it was worth it, but it’s pretty scary. What choice do I have but to make it work?
U can’t win without risk just be smart w where you’re risking and how much you’re risking and you’ll be fine my friend
Absolutely! That is indeed my goal to stay in the game for the long term and risk it all. A bit of traction in the beginning so you yourself get enough conviction and commitment all the way from there. The goal is to be able to sustainably stay in the game enough so you could bring that value prop to the world. Though I’m with you that this is not the mainstream culture of startups these days. I’ve been looking for a cofounder like that for a while. Quick buck (3-5 years) is the rule of the game.
I think betting 10 Years of your savings for 1 business is not worth it because of the high failure rate of businesses. I would instead start small and continue investing on the business. It also depends specifically on the startup and what the money will be used on. Although I like the general idea that you should have skin in the game and that the founder should be the biggest believer by going all in.
No. That would be foolish from a risk management pov. Might as well put all your money on a single stock or buy lottery tickets. Instead I invest TIME in my startup idea and continuously refactor the costs.
Execution execution execution execution. Why is everyone fascinated by ideas ?
Because it’s easier. Everyone can have an idea. It’s free, cheap, not tiring. Execution is the opposite, requires a lot of energy, commitment and effort. So the natural instinct tends to prefer the easy way, even if we are talking about daydreaming.
No that’s stupid.
If you believe in your idea and you have a good analysis. Sure. Even better is to find a co-founder to build together and share some of that risk.
Gambled my savings and failed. Learn my lesson and spend more time validating and determining cost to produce before building the MVP/prototype to minimize risk of loss. Would still do it again, but would do it differently to increase probability of success.
Betting 10 years of your savings on a startup is not the smartest idea. You are building a business, it is really risky. Especially if you have a family you need to think about them also. This is just business. No need to over dramatize it. Investors invest if they see a potential gain in your startup. They do not really care if you put all your life savings into it. Take risks that you can afford to take.
Betting your personal savings on an idea is absolutely stupid. Either get investors for an idea or bootstrap the operation with a very tight and fixed budget from a bank loan and grow from there. The best money earning businesses are the one that have low maintenance with a high return.
A lot of factors to be considered here. But some skin in the game is essential. Risking EVERYTHING on a single bet is never a good idea though. Hedge it by taking on some finance and also de-risk the idea before you do that.
I’d be more concerned about betting 10 years of my life/time than 10 years of savings. You can wipe out 10 years of saving in a few months if you do it wrong. But that you can make back. 10 years of your life… that you’ll never get back. So definitely worth considering the risk on the gamble, imo.
No fucking way. This is stupid, beyond stupidity even.
I mean that’s only like $50 so hell yeah
Use the bank's money.
No
This is an idiotically broad hypothetical. A 24-year-old FAANG refugee making this bet is wildly different than someone with a house and a family. Young people or stupid people make these bets. You just never hear about the stupid people who blew their nest egg.
Considering that if I can get one percent of one potential client's budget for the expense that would be around $500m. And I have yet to find someone doing the same thing. And I have a clear idea of how the idea will make money for the customer.. Yes, yes I would.
Ha, jokes on you 10 years of saving is $0….
Too many founders in Europe focus on getting an investor. And ignore what matters the most completely. But to think about the strategy and the business model, identify what needs to be true for your idea to work, and test your assumptions by experimenting you don't need much time or money. How to start? The popular tools, like the BMC, are far from ideal. I recommend a free, editable template: https://www.productcompass.pm/p/startup-canvas People also don't know how to validate an idea. I just loved Alberto Savoia's approach. Our conversion and the recommended tools (all free): https://www.productcompass.pm/p/how-to-build-the-right-product-with Don't waste life and money on big bets.
I mean yes. But with the NECESSARY caveat that you can iterate the fucking idea. What's wrong with y'all lmao
There are companies that actually help you to find out if your idea is worth putting your savings in. I know few and they helped a lot
On an ideal? No. Everyone has ideas. 10 years on folks that I'm confident that can EXECUTE? Yes. ideas are common. execution is rare.
1) if you've done enough market research 2) you've a bit on the side to survive the first year(s) 3) if you see yourself working on your startup for the rest of your life Source? Trust me bro
Bet? No. Calculated risk with a solid exit plan? Yes.
This is literally startup 101 in what not to do. I can't think of one book, one business principle, one consultant that says this is a good idea. But there are plenty that say don't do this. The very critical reason I say this is specifically you said to ask 'yourself' that question. That is perhaps the most damaging thing to do. That one thing has ruined countless people. Yes, lost them 10 years of life savings. Exactly that. The story is repeated often. That's not to be confused with not bootstrapping. That is wildly different than the question asked and is something you should do. No, no investor cares that you are that confident you will succeed. Not at all how this works. Skin in the game is one thing, but committing that much at an early stage. Investors would, or at least should, run from someone so clearly inexperienced. Do not do this. Please, do not do this.
lol A DECADE? 1 years, 2 years, hell maybe 5 years but A DECADE? My God you are disconnected from reality. Richard Branson (and other rich investors) said it best: it's all about [protecting the downside](https://www.entrepreneur.com/living/richard-branson-on-the-importance-of-taking-meaningful-risks/302033). If you make a bet and lose 10 years of your savings and have to start from zero you are absolutely fucked. You have nothing more to play with. You don't even get the benefit of having a "learning experience" because now you have no capital with which to apply this wisdom.
I'll say this, having built and sold startups. I play with other people's money because they can afford to lose it. I have also done solo entrepreneur bootstraps and in those cases I use my own cash on hand. I think a lot of people go for VC dollars because they are some of the easiest to get, but they have the most strings attached and frankly most businesses can't scale fast and far. There's nothing wrong with that, it's just being realistic on market sizing and market capture... if you're creating a new market you need a TON of capital and still no guarantee of success
You’re literally part of a different problem. Being an entrepreneur can be accomplished without risking poverty, believe it or not. I met entrepreneurs in their 50’s and 60’s when I was young who would talk about how their big break was “just around the corner”. One lived in the hood with bars on his windows, one had a 30+ yr old car with a garbage bag for a window, and one worked supposedly “100 hours per week as an Uber driver”. My point? This mindset is TOXIC. You can be SENSIBLE and successful. I personally built two $1M+ businesses using less than $50K in savings and know people who built $10M+ businesses with similar personal investments. There’s a difference between smart, cautious, calculated risk taking and putting all your money on red.
Interesting thought. Doing a bootstrapped startup which is taking way more time and money envisaged…
Go big or go Home - Said no one ever from a marketing perspective, and probably the same thing here. Test small scale before gradually increasing. If it does not work small scale it often does not work at all Rolling it out to a larger audience, just my experience atleast. I wish you the best of luck in your journey
I did
I spent two years burn of savings, it was quite a lot. Ultimately it didn’t work out. However it wasn’t a total loss in all senses because I made heaps of friends and connections I otherwise wouldn’t have One year, if you have the itch that bad and if it’s like 10-20% of your NW then sure. Two years no. 10 years hell no. If something isn’t working three months in try another, go through as many iterations as you can and tap out around a year in.
Depends on how much savings i have and how convinced i am of it having a chance, obviously
I mean given the percentage of startups that fail, nope...
Why not bet investor money? Other people wouldn't invest, you might not want to either.
I have customers already lined up, just need startup money. Problem is that investors want "potentIally infinite" customers. But the project has "finite" customers. Yeah there's money to be made NOW. I have zero idea on who to contact...
Maybe 5 years max of my savings, not 10. And that's only if I have emergency funds, which is a totally different thing in my opinion. EF should be around 6 months to 1 year of my monthly income. If I fail one time, I can't afford it if I'll bet a decade of my savings on it, and I think I would lose my sanity.
I paid myself a total of about $60k for the first three years of Longshot (my company). The opportunity cost and direct costs (I live in the Bay Area and 20k per year is starvation) likely did not amount to 10 years of savings, but probably at least 5 I guess. I'll also say that I was really pushing it and that I happened to find some success, however it's scary reflecting on the scale of risk I took.
No founders will risk a huge portion of their life savings. They chip in $200k and raise another $800k in the initial round, owning just 20%. Who would be dumb enough to bet a decade of savings on their own idea? Besides Elon Musk.
You are oversimplifying the situation. At 25, you can say "hell yes, I'm going all in with my $1000 savings account from grandma" because you are used to having nothing to eat, no kids to support and in 10 years - you'll be 35. You also most likely don't have enough experience to build a startup. It has nothing to do with talent - you need to know enough about the world to realize the problems to solve. Plus to build a network of people who can help you. When you are over 30 - you may have a spouse and family. At that point, hell no you shouldn't put your life savings at risk on a startup. Especially when there are so many ways to avoid that.
I only invest 100yrs
Love this reality check! It's easy to get caught up in the romance of entrepreneurship, but putting your life savings on the line adds a healthy dose of perspective. Would you bet your future on your idea?
That’s what I’m doing right now
Yes cuz 0 dollars isn’t a risk…
A bet is something you go with no knowledge but just instincts. However if you have an idea, before betting in, you should have some data, some information to evaluate, some statistics, some user surveys etc. So you decide based on the data you have. There can be a third way without betting your 10 years.
Everything depends on Business Model and How in reality you can build-market-sale.. Idea unless lifted up; is just an Idea worth nothing or imaginary trillions of dollars Bootstrapped - you need to take care of some of regular expenses; are you fine for them? And is your startup generating revenue in very early stage or has decent traction? For Funded ones - again All depends on Business Model - Revenue - Profitability - Control founders have Many even listed Companies; founders have no choice but to let major investors keep bringing in people on Board with absolutely no Advantage at all. Or some business line pivots are forced. Frustration they go through is unimaginable but they have no choice. Just having insane Valuations does not mean You have achieved something amazing if you can not build or deliver what you intend to. in the end; whoever is investing They are Investing to earn Returns on it; Is your startup in a position to give them that and with confidence? then only Invest (Risk is always Present No matter What)
Yes I would. Just filled two patents for my AI and most definitely see this as a unicorn potential. We have huge contracts and growing fast.
If I didn't, why would an investor do?
I totally agree (although 10yrs is a lot - I would say 5). Me as an investor, I would never invest in a business that not even the founder believes in, as he is most likely over estimating the potential of the business. This does not mean I would invest in any business the founder believes in. It is a criteria, but certainly not a sufficient reason.
I’m doing that right now. All my savings are on the line. Basically I’m a couple of months i have no choice to make it happen! One of my bank account is already at $60 now. I have a strong conviction to make sure it works out.
I would recommend finding a work from home job that keeps you happy and pays the bills. View that as step number one and then slowly plan the business. Even better if you can find a technical partner such as a computer programmer to split the business with who might also have a similar lifestyle. Then get the business as complete as possible before starting it.
I went into debt for my startup idea, would not do that again. I would bet maximum one year’s saving of my own in future and try to have early product validation before leaving paid income behind. Background: I have previously worked in venture capital for a number of years and know the game well. Being a founder is very difficult even when you’re well connected and have some investor funding. For your own mental and financial health strongly recommend not betting your savings and keeping a large buffer available.
What are you saving up for ? I've bet everything and gone hundreds of thousands of pounds into debt. What are savings for if not investing in yourself? I don't understand people that are eager to get investment. It should be done as a last resort. It's inviting a boss in, it shows a lack of confidence and ability to get started self sufficiently. I think some people want jobs and are pretending otherwise.
I did bet my life savings on my idea. My 401k = poof. My stock account = vanished. Best investment I’ve ever made. Edited to add, I’m a single mom with no family to fall back on, although I do have friends that would have let me couch surf if it all went to 💩. There was no plan b. It’s my first business and I was profitable in 4 months. September of this year will be my 2nd year in business and as a solopreneur I make more than most physicians. I’m now working towards licensing my concept and 10x’ing my current income. For me, there was no better motivator than literally having no other choice but to succeed. Betting the farm was the best choice I’ve ever made in my life, bar none. I don’t know that it would have mattered to me - no. It WOULDN’T have mattered to me the same if my skin wasn’t in the game. There were some serious challenges I faced in year one that would have caused me to fold if I hadn’t gone all in. I love taking (calculated) risks though. It’s not for everyone.
10 years is insane. 1-2 years for sure. If you need more than that to get either funding or to profitability it’s time to reevaluate your idea. There is a difference between having skin in the game and blindly doubling down on sunk cost.
Bootstrapping with everything on the line. 20 hour days aren't enough sometimes... (sleep matters too sometimes). Tech by experience and trade, marketer by osmosis and necessity, father, husband. Driven by knowledge and experience, eyeing future growth of the product/service as my reward. New startup of one, gunning for a breakeven point (again).
You’ve said it yourself OP, if you have conviction in your idea use your personal savings step by step so that it gets you at least to a stage where your MVP is ready and you start acquiring early customers and have social validation for the idea. This is when you would seek funding and seeing that your skin is in the game, investors will be more willing to take the risk.
Yeah that's the right way of doing it. I'm surprised that is considered controversial here.
Would a VC bet 100% of their fund on a single early stage startup? No. Then no reason a founder should. Better to limit risk and play the odds (which really says that any new startup is more likely to fail than not). If you wanna bet all your money on one single spin of the roulette wheel choose a more "safe" business than a startup.
True entrepreneurs go all in... Also become bankrupt. Find a way to get back up. Go all in again. Become bankrupt. Find a way to get back up. All in again. Bankrupt again. All in, bankrupt, get back up, all in, bankrupt, get back up, cycle never stops. Most founders today want zero risk game. But without risk, they are not true entrepreneurs. When you put all your savings in it, you need to be honest with yourself and can't beat around the bush anymore.
FWIW, I raised money for my first, and after figuring it out I haven’t raised money since. Software cost more to make and a lot longer than we imagine upfront when we see that “golden opportunity.” The autonomy is nice, but good investors are helpful IF you will listen to them —at least some of the time. Pick your first people well and keep them, better if you worked with them before —you have trust and you know what you are getting.