Forget VC Money, Fund Yourself

A meta-business model that doesn't get discussed enough- and practically never by VCs- is simple revenue based growth. I know business leaders who absolutely swear by it and won't touch anything else. From their perspective, if it's not making money and in the black when it's small, making it 10x that size won't necessarily make it better. It's a well tested and respected business model if you're product and team can pull it off.

If you can't get someone else excited about your product, then you might be approaching it the wrong way. But there are many reasons why VCs might not want to get their hands in. They might deem it as a me-too or as a novelty not worth exploring. But there's no way they can completely estimate the web community. If you have a firm belief that you offer something someone else does not, or you implement it better, do it. Fund it yourself. The true reason you should give up on your idea is if you cannot sell it to yourself anymore.

Something just felt right when I read, "The best possible way to finance your business is from free cash flow. If you can meet your capital needs without selling equity or without taking on personal debt, do it. It's that simple." Clif Bar, Patagonia and Ben & Jerry's come to mind. Not tech, I know, but it's really cool when a young company can maintain it's mojo, it's buzz, far longer than most people could even dream of. If equity is sold, you're answerable to someone, and you lose control over keeping it's mojo. Whatever it takes to do work you love, with people you love, I'm for always.

VC money can be a good thing if you know exactly what to do with it. Google used the funds to buy servers which they couldn't afford before, but in the end it turned out to be money well spent. But if you just raise the money to live up to the convention, then you should think again. The worst thing you could do is to go on a spending spree just to look busy.

Some products require scale or critical mass before they can be profitable. This is especially true for many website based on advertising models. Also ventures based around getting big partnerships (e.g. licensing deals) may require the prestige of VC backing before you can get through the door.<p>Secondly you might have an option of growing organically for 3 years and hoping that no one else enters the market and that its still buoyant in that time or growing fast with VC support. I am not saying it's not possible to grow fast without VCs but I am sure it helps. I think it just comes down to what business it is.

I bet YCombinator must feel a bit strange having this as the highest voted story ;)

Forget VC Money, Fund Yourself...well, if you don't believe in your product to put your own money or time into it, how can you expect someone else to invest in it themselves?