The VC Lie: Why Most Businesses Should Never Raise Investor Money

Raising VC money has become the gold standard for startups—but for most businesses, it’s a trap. Raising VC money is everywhere—but why? My guess?

Too many businesses today are built to only work at scale, forcing founders to raise money and hire fast just to survive.

But here’s the thing—most businesses don’t actually need outside funding. Let’s break down why.

3 Reasons New Entrepreneurs Think They Need Investment Capital

1. “But I need cash to build my product!” → No you don’t. Build a low-res version first.
2. “I need money for marketing!”→ Try selling to 10 people first—if you can’t do that, money won’t fix it.
3. “I need money to hire a team!” → Most early-stage businesses should be scrappy—outsource or do the work yourself. The number of success stories beginning with 2 people in a garage is overwhelming at this point.

VC Money Might Cost More Than You Think

Let me just start by letting you know that I am biased in this area. I don’t like debt. And I don’t like businesses that take on huge amounts of debt and operate at a loss for long periods of time until they can go public and basically be bailed out by investor capital.

If that’s the kind of business you want (and there are many success stories out there to back this model up) then go for it.

But I value things other than money. Like control of my time and effort. I like living a stress free life where I’m not worrying about operating at a loss and having VC execs control the direction of my company. I also like business models that are scrappy, low overhead, and actually generate revenue and quickly lead to profitability.

Look, if you have a new idea for a product or service, there’s a damn good chance that you can bring that product or service to life without having to borrow money from someone. I’m sure you know this already, but the money that VC’s give you ain’t free. They now own part of your company and you answer to them. I don’t know about you, but I became an entrepreneur, in part, because I wasn’t interested in answering to anyone.

Lastly, there is more than enough data out there to tell us that VC funded startups do not outperform bootstrapped startups. As a matter of fact, the opposite is true based on the mediocre returns VC forms get from their investments.

So what’s the alternative? 

Instead of chasing investor money, here’s how to actually get a business off the ground without selling your soul.

Focus on profit over scale. Start small. Build a scrappy, low-res version of your product and test it. See if real people will actually pay for it. If they do, refine it. If you need some capital, borrow a little—not millions. Hell, ask Aunt Selma for a loan before you ask some VC firm that’s going to take half your company.

If you show some VC your pitch deck and they like your idea and give you some money to get cracking, congratulations, you just became employee #1. But if you want to start your own business because you value freedom, autonomy, less stress, and not answering to a boss, then skip the VC route.

If you want to run your own business, own it outright. Skip the stress, keep your autonomy, and start small. The best businesses aren’t built with VC cash—they’re built with grit, smart decisions, and a focus on profit from day one.