Jared Burden Shares Insights on Bootstrapping vs. Seeking Outside Investment for Shenandoah Valley Entrepreneurship Summit
Every startup entrepreneur faces a decision: Should I bootstrap my business or seek outside investment in order to fuel growth?
There is no one right answer to this question. Every entrepreneur must consider their short- and long-term objectives, market conditions, and stage of growth, among other factors.
GreeneHurlocker partner Jared Burden recently provided guidance for entrepreneurs on these issues as a speaker at the Shenandoah Valley Entrepreneurship Summit, hosted by the Shenandoah Community Capital Fund.
Jared, along with management consultant Aram DiGennaro, presented and answered audience questions about the various pros, cons, and strategic considerations related to bootstrapping versus raising capital.
Some of the main points addressed included:
- The bootstrap versus raise capital choice is a false one for the vast majority of entrepreneurs. Most businesses are small and non-scalable, and there’s nothing wrong with that. Investors want a return, and they generally do not invest in businesses that don’t have plans to grow by scaling up. In this sense, most businesses are (and should be) bootstrapped.
- Bootstrapping is a key part of the entrepreneur ethos: To be an entrepreneur is to make the very most of everything that you have, including time, resources and energy.
- In a very real sense, cash is really all that matters. From day one the entrepreneur is in a flat-out race to avoid going out of business. High-flying goals for outside validation through having someone want to invest in you are fine, but the only thing that matters is that the business cash-flows.
- Working with an experienced lawyer is critical in the early stages of a business venture in order to get certain key steps right, such as corporate formation, contracts, and founder agreements. But with a bootstrapping small business, that assistance should be designed to be in support of the only thing that matters: cash-flow survival.
If you’re a startup founder or investor, and would like to discuss important legal issues that commonly arise in the startup ecosystem, please contact Jared Burden.