Using own startup capital or using outside investors?

[Xennial]

After watching the Dame Dash Breakfast club interview and all the nonsense he was spewing, it got me thinking about this.  For those on this board that have experience with their own startups and have success please provide your opinion on which is the better way to go.  I know there are pros and cons for both but would like to hear more.  I've also heard of plenty success stories with both routes.

 

[nazdrowie]

its a mix of both...you got people putting up so much of their time/effort/money into prototypes/preliminary schematics, then building capital through investors...

at least thats what i can gather from watching Shark Tank, right? 

 

[nawghtyhare]

Only a boss uses his own money
U use ur own money then flip it
U never keep the money in ur hand because u want to keep flipping it
U get money from somewhere else they're gonna be ur boss
And I don't know about u
But I don't need no boss telling me what to do
U can sit here and listen to all these chatty patties
Or u can be like me
A boss
Who uses his own money for businesses
So I can have something to leave my kids
Ur kid can't look up to u
And think ur a superhero when ur boss is in the same room as u
Because u need to answer to another man
U want ur kid to look up to u
And how u do that????
By being a boss
Using ur own money
And flipping it

 

[johnnyredstorm]

why would i invest in you if you have no skin in the game? need to be a balance of both to get things off the ground.

 

[wj4]

its a mix of both...you got people putting up so much of their time/effort/money into prototypes/preliminary schematics, then building capital through investors...

at least thats what i can gather from watching Shark Tank, right? 

It's also important to keep in mind that some folks are happy with where they're at and have no need to expand further.

When you have VCs investing in, they obviously want their money back with a handsome interest rate. They will get involve if whatever you're doing doesn't work. A lot of people become entrepreneurs because they want to do things their own way so this is an important factor.

On another note.....
View media item 1451221

 

[Xennial]

why would i invest in you if you have no skin in the game? need to be a balance of both to get things off the ground.

So you wouldn't invest in founders if they were like Stanford and MIT advanced degree backgrounds with work ethic/drive and a good business plan if they don't have some of their own capital invested?

 

[johnnyredstorm]

nope. if you have no skin in the game you have nothing to lose. how can i trust you to bring your idea to fruition?

 

[Xennial]

nope. if you have no skin in the game you have nothing to lose. how can i trust you to bring your idea to fruition?

You don't count time and work put in as something to lose?  

 

[johnnyredstorm]

nope. there's an enormous start up bubble, if you're not putting money on the line, you're not showing me intentions of monetizing, and i dont see a sound investment idea. this could just be a hobby for you.

http://blogmaverick.com/2015/03/04/why-this-tech-bubble-is-worse-than-the-tech-bubble-of-2000/

i'm not saying you need to put every dollar you have into the venture, but you need to show me you're serious in making this work with your own capital—however much you can afford to risk.

 

[$tacy]

Those people on shark tank just don't wake up and go pitch a idea. The ones they invest in already have sold product and invested money in themselves. They need those investors to expand, production at a high rate isn't cheap. U put your own cash up and it fails well...

 

[fontaine]

nope. if you have no skin in the game you have nothing to lose. how can i trust you to bring your idea to fruition?

you know investors would though, bruh.



Its a mixture of both but you want to use other people's capital if at all possible...

You want to remove liability from yourself as much as possible aa well

 

[Xennial]

Those people on shark tank just don't wake up and go pitch a idea. The ones they invest in already have sold product and invested money in themselves. They need those investors to expand, production at a high rate isn't cheap. U put your own cash up and it fails well...

Yeah majority of the time they're looking for capital to scale and not startup capital

 

[Xennial]

you know investors would though, bruh.



Its a mixture of both but you want to use other people's capital if at all possible...

You want to remove liability from yourself as much as possible aa well

But if you use investor's capital don't they usually want majority of the equity if they're putting up all the capital?  Wouldn't that leave you only a small amount of equity left rather than the majority 

 

[executive76]

His "spewing of nonsense" now has 3 threads discussing it.



There's no set way that will work for everyone or a particular business...look at how well crowd funding works. Some people are just stuck on the old ways because that's what they were taught.



The real question is...do you wanna be boss or a supervisor?

 

[diego]

Dame Dash got everyone on NT thinking they could be a businessman.
Dudes could barely put a well thought out sentence together but suddenly everyone working on a start up.

What good is it to own a business when the person with a boss making more money than you?

 

[Xennial]

Dame Dash got everyone on NT thinking they could be a businessman.
Dudes could barely put a well thought out sentence together but suddenly everyone working on a start up.

What good is it to own a business when the person with a boss making more money than you?

Well in my post I asked the ppl on here that are successful "bosses" to chime in

 

[wayniac211]

I think a lot of people are concerned of being overused making kibble bits while busting their *** for a company that has their top officials taking huge bonuses and all that jazz.

Idk I dig what Dames push for knowing self worth and passing it on to your seeds but came off arrogant as fuh

 

[slighted]

 
You don't count time and work put in as something to lose?  

Nope, this isn't how the real world/VC/PE works.

You absolutely need your own capital/skin in the game if you ever want LP/investor commitment.

No one is going to give you money just because you have an "idea." Oh, and remember that every pitch/meeting is all or nothing: you need to have a bulletproof business plan, how much capital you need (will this be through debt or equity), and how you've executed (yes, you need to show a track record) and will continue to execute.

 

[dman14]

a lot of these startups are good at raising money but a majority dont even turn a profit

 

[Xennial]

a lot of these startups are good at raising money but a majority dont even turn a profit

It's not about turning a profit, Snapchat had a $10 billion valuation with $0 in revenue.  They're now at a $15 billion valuation after latest funding round

 

[fontaine]

Nope, this isn't how the real world/VC/PE works.

You absolutely need your own capital/skin in the game if you ever want LP/investor commitment.

No one is going to give you money just because you have an "idea." Oh, and remember that every pitch/meeting is all or nothing: you need to have a bulletproof business plan, how much capital you need (will this be through debt or equity), and how you've executed (yes, you need to show a track record) and will continue to execute.

But I think the amount of equity needed isn't as Mich as folks are putting off...

VC funds are frothing at the mouth for new ideas because the market is saturated with investors and there's a lot of cash flowing around...

Go look up the top 50 startups from MBA programs and see how Mich capital they raised.

Some cats from Harvard raised $325M...

A chick from Houston raised $10M


You don't have to have as much cash in it as people are saying in here...


People have a ton of cash from becoming liquid during the recession... People want mega returns that beat the bull run we are..

And what better way to get it than finding the next Facebook?

His "spewing of nonsense" now has 3 threads discussing it.



There's no set way that will work for everyone or a particular business...look at how well crowd funding works. Some people are just stuck on the old ways because that's what they were taught.



The real question is...do you wanna be boss or a supervisor?

There's 3 threads because of how ridiculous dude sounded with nice things sprinkled in...

Not because some get it and some don't

 

[mplsdunk]

Investors can be annoying af. We don't have any but the resturant I work at does. They don't understand the resturant biz. Not my company though so I don't care.

 

[jamie dimon]

First L was investing in a restaurant.

 

[Coromanti]

I want to use my own capital, or a loan.

Personally I want to launch a company and own it outright. I couldnt bare knowing that someone else had a say in the company I started.

The company I intend to start WILL be a passion project and so I more or less wouldn't want someone to having a controlling vote/opinion.

I'm not closed to outside suggestions, I just don't want anyone to have the ability to strong arm me into a decision.

 

[johnnyredstorm]

a lot of these startups are good at raising money but a majority dont even turn a profit

It's not about turning a profit, Snapchat had a $10 billion valuation with $0 in revenue.  They're now at a $15 billion valuation after latest funding round

but they have a ton of monthly active users and a model that can be monetized. so you can get around the lack of profit in the interim by that user base and intention to monetize in the future. regardless, snap chat is a bubble that will burst just like yelp has slowly deflated.

Nope, this isn't how the real world/VC/PE works.

You absolutely need your own capital/skin in the game if you ever want LP/investor commitment.

No one is going to give you money just because you have an "idea." Oh, and remember that every pitch/meeting is all or nothing: you need to have a bulletproof business plan, how much capital you need (will this be through debt or equity), and how you've executed (yes, you need to show a track record) and will continue to execute.

But I think the amount of equity needed isn't as Mich as folks are putting off...

VC funds are frothing at the mouth for new ideas because the market is saturated with investors and there's a lot of cash flowing around...

Go look up the top 50 startups from MBA programs and see how Mich capital they raised.

Some cats from Harvard raised $325M...

A chick from Houston raised $10M


You don't have to have as much cash in it as people are saying in here...


People have a ton of cash from becoming liquid during the recession... People want mega returns that beat the bull run we are..

And what better way to get it than finding the next Facebook?

Did you check out that link I posted written by Mark Cuban? Your post is basically why he thinks there's a huge tech bubble right now on the private market bunch of people with too much money putting it in places that won't ever generate a return.