There seems to be a common mindset among many entrepreneurs. If they are starting a business, they often find investors to help fund the launch. However, a recent article from Forbes argues that most entrepreneurs don’t really need an investor. All they really need is a little old fashioned bootstrapping. However, you might eventually need to seek investments if:
Sales are strong – too strong. If you are not able to keep up with demand due to lack of funds for production, and your company is too young for banks to be interested, you will find that investors love these odds, and are quick to go for a chunk of the action.
You need a prototype. When you have invented a new technology, you need expensive models and testing, including samples for potential customers. If you don’t have the personal funds to make these happen, investors might be your only option.
You need specialized equipment. If your solution depends on high-tech chips, injection molding, or medical devices, and you can’t get financing from suppliers, giving up a portion of the company to investors is a rational approach.
Photo by Marta Sánchez