1 Big Mistake I Made When I Raised Money for the First Time

Like most first-time founders, I made a lot of mistakes when I raised money for the first time.

But this was the biggest one, by far:

Raising money from friends & family.

Here’s what happened:

We had secured government funding that needed to be supplemented with $50k in private funding.

At this point, sales were non-existent and every professional investor said we were “too early.”

So, we turned to friends, family, and family friends.

And here’s the thing, most of them said yes.

Not because it was a great investment, or they thought we were going to build the next Google; but because they believed in us.

Choosing to invest was not a business decision, it was a personal one.

So when we failed and folded the company, it felt like we had failed them personally.

Failing someone close to you is a unique form of guilt.

It lingers.

But, it’s also worth acknowledging that making this mistake taught me a lot.

Customers are your first investors.

Don’t raise money from anyone until you’re able to consistently sell your product.

Reinvest every cent of revenue back into the business.

Only take money from friends and family as an absolute last resort.

And if you do, over-communicate your progress.

Don’t hide the fact if things aren’t going well.

And if you fail, honestly assess the reasons why and own up to them.

Confess.

Repent.

Keep moving forward.

This is why I encourage everyone to see their mistakes (and “failures”) as necessary steps along the path.

There is always a lesson to be learned.