Most Startups are Self-Funded

With all the talk about startup financing rounds, it’s easy to forget that most startups are self-funded. Self funding ranges from personal savings to credit cards to consulting with one common theme: resourceful entrepreneurs working through adversity to achieve their goals.

Just last week, I met with an entrepreneur who’s been working on her startup for several years while still having a day job. She identified a valuable, urgent problem (hair on fire!) and was able to get the future customer to fund development of the product while she retained the intellectual property. Customer-funded startups are often the best.

Locally, I know an entrepreneur that drove Uber on nights and weekends, especially during concerts and events for surge pricing, so as to work full-time on his startup. After doing this for a year, and getting some initial traction, he then raised money from investors. Traction first, investors second.

Of course, the best known local success story is self-funded: MailChimp. In the early days, MailChimp was a web consulting firm before morphing to an email marketing platform after a few years. Now, MailChimp will do over $600 million in revenue this year and is one of the most valuable tech companies in the country.

The next time an entrepreneur laments a lack of funding, make sure they know that funding isn’t a pre-requisite for success. The main pre-requisite for success: grit.

One thought on “Most Startups are Self-Funded

  1. I couldn’t agree more David. The self funding, in whatever form it’s done, also provides a level of commitment to the endeavor that is arguably at risk when there is early outside funding. In other words the act of funding itself is an assert beyond the actual dollars or time, since every startup will live or die primarily on the level of commitment and perseverance of the founder(s).

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