As you already know, we run appointmed without any outside funding. This has been frowned upon by more people than I can count. Especially other founders are puzzled by the fact that we don’t raise money to hire an “army of salespeople” and focus on “growth.”
Even investors who wouldn’t reply to emails back in 2016 reach out regularly (mostly after we share a glimpse of our KPIs on social media) with the promise of turning appointmed into the next “big thing” in the healthcare industry if we “work” with them. — Thanks, but no thanks. We are happy with where we are right now.
Don’t get me wrong: I’m not against funding in general. And I certainly don’t think every startup should or can start as we did. We were fortunate to have a team of already successful entrepreneurs who could cover most of the initial expenses.
The mentality of defaulting to outside funding just doesn’t sit right with me.
Growth at all costs will kill your business.
From what I’ve seen, way more startups are ruined by VCs (and business angels to some extent) than actually turning a profit for the founders. This is true not only in our local community but also for the big players in Silicon Valley.
Almost all of them are laying off thousands of employees in the current economic downturn because they never really made any substantial profit and are now scrambling to stay afloat. Everything is built on a house of cards, and now that the music has stopped, many are left without a chair to sit on.
Sure, you’ll get a lot of press coverage with a multi-million Euro investment. Your mom will be proud to see your face in the media, and you get to feel good about yourself. I see how enticing that can be. However, as soon as you take the money, you are under pressure to use those funds to grow as fast as possible (whatever that means). Otherwise, there’s a high chance you won’t be able to raise another round, which will most certainly lead to losing everything you have achieved so far. No one will write about that unless your downfall counts as a scandal.
Growth at all costs also comes at the expense of quality and, far worse, the loss of focus on your customer. You are no longer exclusively held accountable by them, but now you must also make your investors happy. Many founders have learned the hard way that “happy” can mean vastly different things for those two groups.
Aim for resilience instead.
Starting on our own was incredibly difficult initially, but we are now at a point of extraordinary resilience. We answer to no one but our loyal customers. This is especially important in an economic landscape where people are increasingly hesitant to spend money on anything. Our superpower as a company is that we can afford not to grow for a while. We would have no problem waiting it out while improving our product until things turn around again. How many startups – who haven‘t raised money recently – do you know that can stay alive for 12 months without another round? 18 months? 3 years?
Thankfully, we are not only weathering the current storm but are actually growing faster than ever before. This would not have been possible with the distraction and added pressure of seeking funding to sustain our business.
Outside funding can be an incredibly effective strategy if applied correctly. On the other hand, it‘s incredibly easy to get trapped in a vicious circle that very few manage to escape. So, think long and hard about whether you really need external funding for your venture.
My guess: In most cases, you will be better off without it.