

Ask HN: Why is raising capital so important? - TimothyBurgess

I've done a bit of googling on the subject but nothing really definitively answers the question.  I've also seen a few similar posts here... but nothing hit the nail on the head.  And to clarify, by capital, I mean money from investors.<p>I'm 23 and working on my first startup.  Naturally I've gravitated to HN, and a central theme I've noticed is funding, funding, funding!<p>So... why?<p>The top two reasons that come to mind are the ability to advertise your product (which can cost a considerable amount of money, depending on your market) and sustenance (ranging from processing power to food, shelter, and office space).  I'm sure it also helps that I'm "technical"... so I don't have to pay anyone else in that respect.  And I'm also sure having a good team (employees) increases your chances of getting a product out the door in a timely manner... but there's a lot of overhead involved in that too - from the hiring process to bureaucratic organization.<p>To me... there's much more value in learning how to provide for yourself.  I tend to relate investors to rich parents who give their children everything they want - and as a result, a lot of the time, these children are relatively ill-equipped for the real world.  (Although, I can see how investments would greatly benefit someone who has already knows the ropes from bootstrapping their own startup.)<p>I feel like, in the long run, it would be much better to build a business from the ground up - on my own.  It would force me to make the best possible financial decisions and get really creative with the marketing process.  There's no way I would learn all of these important aspects to running an efficient, profitable business if I were given a million dollar shortcut.<p>HN... what is it really about?  Bragging rights?  For what do you really use all that money?
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atgm
I guess if you're one guy on your own bootstrapping it, it's not terribly
important, but if you have a team and you want to be able to pay them, pay for
a space to work in, pay for business trips to meet potential customers/related
services, then you'll need funds.

It gets more complicated if you need to get specialists -- people for web
design, print design, SEO/analytics, PR...

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toadi
Growth is the most important factor I think to seek investment. So you can
rapidly expand which is sometimes needed: See the Foursquare vs. Gowalla
battle.

Even traditional businesses which make a profit can seek investment too for
several obvious reasons:

    
    
      - Diversification (New Products/New Market)
      - Market Development (Existing Products/New Market)
      - Product Development (New Products/Existing Market)
      - Market Penetration (Existing Products/Existing Markets)

