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To Raise Money or Not

alord

Bronze Contributor
Read Fastlane!
Speedway Pass
Jun 8, 2019
108
119
Hey everyone,

I would love to hear your advice about the topic of raising funding or continuing to bootstrap my company.

There is not a yes or no answer, but I think hearing an outside perspective would be very helpful!

To give you some context. After graduating from a top university, I decided to launch my own business.

The company is a portfolio of online businesses. Specifically, content sites are seen as an authority in a specific niche (i.e., golf, crypto, antivirus software). I rank these sites on Google through SEO and make money through affiliate commissions and/or advertisements.

Over the past two years, I have bootstrapped this company from $500 in my bank account to over $120k in net profit currently sitting in the company's bank account.

Specifically, to fund the first content site, I have done some freelancing gigs and still own an SEO agency that accounts for about 50% of the revenues.

I've not achieved life-changing money yet, but it has allowed me a lot of freedom. To live wherever I want and on what I love building (I love this business model and industry.)

For a while now, I have had this idea that it could make sense to raise some money. In this period of low-interest rates, it wouldn't be too crazy from what I've seen to raise more than $1 million in funding for giving away around 10% of my company.

Especially when on equity crowdfunding platforms, there are so many small investors looking for higher yields than traditional investments.

The obvious benefits would be:

  • Funding to acquire new content sites in the portfolio. Content sites usually sell for a 3-5X multiple, while startups on equity crowdfunding platforms are valued at more than 10X. I could essentially buy money at a discount and continue to compound that over and over with new acquisitions and sales.
  • Have more room to make long-term decisions while at the same time growing faster.
  • Resources to hire a talented team from the get-go, hire consultants to save mistakes, and build something more meaningful.
  • Having a team not only speeds up things but also allows me to have someone to confront my ideas with and, as said, build something more significant.
  • More resources to experiment

Can I do that also without raising a penny? Yes, most definitely. Going from home-base to home-base, I could definitely compound things and keep building something great. And don't get me wrong, it's not my goal to skip bases and go for a home run right away. I love the process.

What's blocking me from doing this is that I do have funds to grow the company. Yes, I currently have to compromise a lot (I still do a lot of the work), and I would love to have a bigger team. Also, raising funds would obviously slightly limit the flexibility I'm enjoying right now in deciding where I allocate capital.

Another reason I don't feel much like raising is that it seems like going through that process can be a distraction from actually building a great company and products.

But, my thought is, I'm 26, and this is my first company. If I could save some mistakes and time on my way to building a big company in an industry that I love, why shouldn't I?

I don't want to feel attached to my company. They all grow and could die one day, so perhaps deep down, I don't want to do it because it's outside of my comfort zone.
 
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Private Witt

Gold Contributor
Read Fastlane!
Read Unscripted!
Speedway Pass
Feb 20, 2018
726
1,325
Oklahoma
If you don't want to feel attached you should not raise the money as the raise and aftermath will turn into a full-time job/headache. But than again I've never raised 7 figures so have no idea but wish I had the numbers you were producing as my goal is to go the higher route and preparing for the road of the raise.
 

alord

Bronze Contributor
Read Fastlane!
Speedway Pass
Jun 8, 2019
108
119
If you don't want to feel attached you should not raise the money as the raise and aftermath will turn into a full-time job/headache. But than again I've never raised 7 figures so have no idea but wish I had the numbers you were producing as my goal is to go the higher route and preparing for the road of the raise.
What I meant by that I that I don't want to consider my company as "my baby." I'm okay with selling part of it or eventually all of it in the future
 

Private Witt

Gold Contributor
Read Fastlane!
Read Unscripted!
Speedway Pass
Feb 20, 2018
726
1,325
Oklahoma
What I meant by that I that I don't want to consider my company as "my baby." I'm okay with selling part of it or eventually all of it in the future

Ah I thought meant different. I used to feel like my company is my baby but moved on from that and now have a ten year exit plan.

As for being a distraction and taking away from building a great company and products. That is a real worry on both sides. Looking forward to seeing if anyone who has gone down the road can share on that.
 
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