Financing my next startup

Posted 12 November 2006

I’ve spent a lot of time in the past couple of months thinking through potential opportunities for building a new business. I’m still exploring a variety of options, but a few things are bubbling to the top.

My previous company (Fotiva) was a venture-financed business, and as much fun as that was (and I mean that only partly facetiously) I’ve decided not to take that path this time. There’s several reasons:

• There’s a pretty narrow range of businesses that make sense for venture investors, and a much wider range of businesses for which there is an opportunity to make a contribution and build an excellent small enterprise. I don’t need to build a $100 million operation.

• I want to be able to focus my energy on building a product and a business, not on raising money.

• I want to be able to make my own decisions, and to have the flexibility to let the business evolve over time without the pressure of commitments to investors.

So I’m going to take the self-financed path for a while, which largely means working without pay and partnering with a few other folks who are willing to do the same in return for equity. The capital needed to start a new web business today, other than salaries, is amazingly small. Once we have a product and customers, we’ll consider outside investment if it seems a worthwhile tradeoff to enable faster growth.

It’s a big risk in some ways, and there are days when it seems a little crazy. But this is my third time around, and somehow it has always worked out in the past. The opportunities have never been greater.