

Ask HN: Why would I want funding / investment? - wotang

I have a company in a pretty new market and it would be easy for us to get additional funding but right now we simply do not need it to grow. We are profitable and can grow at the speed we need to grow to satisfy increasing demand for what we offer.<p>I see other companies in this new market getting funding every other week but I do not see any benefits for us. It wouldnt make a difference to how we scale the operation. Does it make sense to seek funding simply for additional business advice?<p>We have been running a variety of online businesses in the last 10 years so I also wouldn&#x27;t know in what way this could help.<p>We plan to develop the company &#x2F; brand for another year and then sell the whole business.
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DigitalSea
Like anything in this world, more money means more opportunities. There is
nothing wrong with organically growing your company, but sometimes taking
investment can help you realise your goals a little faster. If you have a
truly unique product or application, you'll want to get it out there before
someone copies your idea and executes it better. I think the biggest advantage
of investment from a proper VC is you will usually gain access to helpful
resources, business advice, mentoring and support. It is in the best interest
of the venture capitalist(s) to guide you as much as possible (consider it is
their money).

The downside to investment is you'll have to give up a piece of your company
and if you don't need investment, why lose a piece of your company just
because someone gives you some money? The reality is once you take investment,
you no longer just get to call the shots anymore. It becomes a collaboration,
a team effort and anything you want to do which could affect the investment
will need to be run by the appropriate entities (this can result in you not
having as much freedom as you would without taking on investment).

My advice would be to hold off. If you don't need it, don't seek it. You will
only be giving up a piece of your own company for possibly zero benefit other
than a little more cash buffer. Especially considering you are planning on
selling the business in a year, what if you don't sell it for as much as you
needed too? Then the VC gets everything and you get nothing.

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dexxter
I would try and answer the following questions.

1\. Can a competitor enter your market, outgrow you and reduce your expected
slice of the pie?

2\. Does the revenue your business generates, increase exponentially as you
increase the number of users? (e.g. revenue based on ads)

3\. Can funding let you approach a different market? (say your target
customers are SMB and the different market is Enterprise)

4\. Can your business gain significantly if exposed to a group of startups
that are funded? (one immediate advantage to being YC funded is access to
other YC funded companies)

If the answer to any of the questions is a Yes, I would definitely consider
looking at funding.

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wotang
Thank you, great questions to ask. Only 2 is a sort of yes but we already
reach market saturation with our product since the market is still very young
and growing.

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tannk11001
You can give jobs to a few more people, you can serve a few more customers,
you can experiment with bigger ideas, you can have a bigger impact, and you
can sell something bigger when it comes time to sell the whole thing.

But as you seem to already know, there's no reason that those need to be your
priorities and pursuing them comes with added cost and risk. If you're
confident that you can satisfy your personal goals without taking investment,
there's no reason that you should.

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anigbrowl
If you're happy with your organic growth then that's fantastic. Joel Spolsky
gave a very good talk at at a YC conference some years ago where he compared
the organic growth strategy at Fog Creek software with the capital-raising
strategy at Stack Overflow and identified some factors that made the different
choices appropriate in those different contexts.

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ksherlock
You don't want funding. Hacker News (née Startup News) is a alternate reality
where the average business plan looks like:

    
    
        1. Collect Underpants (MVP!)
        2. ? (VC Funding!)
        3. Profit

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wotang
Thank you everyone, great feedback!

