Our customers are the only investors we've ever had
We've had investors since day one, even though they've never asked for shares. They're our customers. And seeing it that way changes how you look at everyday work.
Leer más →How to fund a startup without raising a round
Before you think about investors, there are plenty of ways to fund a startup. The best one is usually the most boring: someone paying you for what you do.
When people talk about how to fund a startup, they almost always talk about investors.
Angels. Funds. Rounds. Pitch decks.
And that's fine. But something gets forgotten: the biggest source of funding there is has a name. It's called a customer.
The question before the question
Before you ask how to fund your startup, ask yourself this:
What exactly do I need the money for?
Not "to grow". For what. To build the product? To hire? To live on while you get going?
Each answer has a different solution. And many of them don't involve selling a piece of your company.
Five ways to fund a startup without investors
1. Customers from day one
The most obvious and the least used.
If someone has the problem you solve, they can pay you before the product is finished. A minimal version, a service, a deal with a first customer who needs the solution.
That's how PagoCRM started: a club that needed to collect fees from families paid us to solve it. That project funded the beginning of a product.
2. Services that fund the product
The model I know best.
You sell what you know how to do (development, design, consulting) and invest what you earn in building something of your own. Slow, yes. But every step is paid for.
And there's a hidden bonus: working for clients is how you find out which products make sense.
3. Pre-sales
Selling before you build.
If ten people pay you upfront, you have funding and validation at the same time. If nobody pays, you've saved months of work.
4. Recurring revenue, even small
A small monthly fee, multiplied by customers who stay, funds more than you'd think.
It won't pay for a launch party. It will pay for building a bit more every month without asking anyone for anything.
5. Time
Sounds odd, but it's funding.
Keeping your costs low, starting part-time, or living off a job while you get going buys you what a round sells at a high price: time to get the idea wrong and try another.
What these have in common
All of them put the customer at the centre.
And that changes how you think. When customers fund you, you build what they need. When investors fund you, it's easy to end up building what they want to see.
An investor bets on what you could become. A customer pays for what you already are.
So when should you look for investors?
When none of the above is possible. When you need a lot of money before you can sell anything, or when your market only rewards whoever gets there first.
That's not bad. It's a different race. It's just worth knowing you chose it, rather than ending up there because it was the only thing that sounded like a "real startup".
If you're starting out
Make a list of everything you'll need to pay for in the next six months.
Next to it, write down who could pay you for something you already know how to do.
Very often, the funding you're looking for is in the second column.
P.S. I wrote about why we never raised in I don't want to raise. I want to choose.