Andy Kessler, a former hedge-fund manager, wrote in the Wall Street Journal today, Private Startups, Where Investor Dollars Often Go to Die, about how almost all investments in startups fail, because almost all start-ups fail.
Just because you can invest [in startups] doesn’t mean you should . . . Once you’re allowed to invest in private startups, my advice is: don’t. Success is much harder than you might think.
Kessler’s advice is more than a caution to investors, but a reminder to business owners and would be entrepreneurs, and it echoes my earlier post: Better to start and run a business that doesn’t require investors, than to start one that can’t succeed without them. If your business can’t succeed without investors, chances are it won’t succeed.
If you are in Silicon Valley and your business plan has been vetted and blessed by veteran startup investors and entrepreneurs, you will most likely still fail. If you are in Sacramento, Folsom, El Dorado Hills or Roseville and have a solid business concept, make a go of it without investors. I heard Dave Ramsey say that money from investors and loans cause business owners to make sloppy decisions they soon regret. Invest in yourself and your unique skills with slow and steady self-funding. You won’t make a big splash and grab the headlines, but you will be able to direct your course, make good business decisions and shape the life you want.