The Entrepreneur Insiders network is an online community where the most thoughtful and influential people in America’s startup scene contribute answers to timely questions about entrepreneurship and careers. Today’s answer to the question “Is it a good idea to build a startup without investors?” is written by Jessica Iclisoy, founder and CEO of California Baby.
“How many cookies did we sell today?”
This is the question a friend posed to me when I asked him if he wanted to invest in a passion project: a baby shampoo that I had been developing for three years.
Before I responded, he told me the story of an investment he made in a friend’s cookie company, and how he would call every day after closing to find out how many cookies were sold that day. He said that if I could stand someone like him, constantly asking questions about how the business was doing, second-guessing my decisions, and loudly pushing to keep costs down, then yes, he would be interested. But, after he put it to me that way, I realized that I wasn’t.
Some business ideas need to be birthed, not funded. If an idea is especially unique or ahead of its time, there is immense value in growing your business without investors.
Here’s why you might want to reconsider working with investors:
Be the master of your ship
Having complete autonomy to make key decisions as you see fit will allow the business concept to progress and find its niche. Businesses are like children: They grow and change. Investors, especially early on, may cause diversions from your original mission at a time when it is vitally important that you, the founder, be the master of the ship. After all, the investors’ job is to drive revenue, which entails ensuring growth goals, new product launch timelines, and exit plans. This can stymie a critical time in which the founder must be a visionary, creating the company DNA and serving as a beacon as the business evolves.
Remember that slow and steady can win the race
Growing a business without investors might make growth a little slower, but on the plus side, it allows for more deliberate decision-making. When your business grows organically, without an artificial timetable, it is built on a strong foundation. It will be more authentic as a result, and will create trends rather than reacting to them. A consciously grown company has staying power in the marketplace, with the ability to weather many types of storms.
Investors focus on keeping costs down or on pushing product choices that fit neatly into an existing category or fad. This can be detrimental to a new company or brand, especially before it has the opportunity to fully understand its ethos. My mission has always been to use the very best quality ingredients and components for my products, with zero consideration for cost. If I were held to investor consensus, which would most likely differ from California Baby’s high standards, different choices would have been made and I would’ve been pushed to come in at a lower price point. In my view, this would have resulted in a deeply inferior product—the opposite of what I set out to do. I had the freedom to put product quality and customers first, knowing they would pay more for a higher value.
Gain priceless, on-the-ground personal knowledge
I started my own company so I could have complete control of every step of the process: from the product to the shape of the shampoo bottle to the messaging on the label. My goal was to bring innovation and to make change in an industry that doesn’t want a lot of change. I was driven by a mission—not money.
Because of this, I knew I had to go it alone, which meant wearing multiple hats, and no days off or vacation time for the first eight years. But what I lost in sleep and downtime I gained in priceless knowledge that can only be obtained by rolling up your sleeves, manning the sails, and steering the ship into unchartered territory. When you run your own business without investor capital, it’s exhilarating and scary—but the business belongs to you, and you can spend your days doing anything and everything from approving copy and discovering resources to meeting your customers.
From the capital to scale your business to the networking opportunities they offer, there is no doubt that investors can play a crucial role in taking a startup to the next level. However, having founded my company nearly 20 years ago and watching it grow without taking a single dime from an investor, I’d argue that the price you pay for having no investors will far outweigh the costs. The autonomy and the value from running your business as the visionary will ensure it is rooted in its original mission and goals while giving you the substantive knowledge to truly grow and drive your business as an entrepreneur.
