Many startups are fundraising money, and they are doing it fast. When a competitor is seemingly excelling in something, the rest follows.

Most entrepreneurs consider fundraising to be the most crucial step to starting and sustaining a business. But in reality fundraising can actually be contrary to the entrepreneurial ethos because it limits entrepreneur’s freedom to build the kind of company they have envisioned building. So why give your company away when you don’t necessarily need to take the risks that come with fundraising? Especially when it involves individuals that do not necessarily have your company’s best interest or your best interest in mind.

Fundraising, Not Fad-raising

In recent mentoring sessions, Endeavor Mentors advised the network to not be too focused on fundraising, too much so that they overlook what’s more important. It was advised that entrepreneurs should always determine the purpose to fundraise as most times, the hurry to fundraise can be detrimental to the company especially when entrepreneurs are unsure on how to use the money. Don’t simply do it because everyone else shares an intense and widely shared enthusiasm to fundraise but rather focus on what matters for your business, what you’re selling and eventually the money will come to you.

Revisiting Your Vision

What separates true entrepreneurs from mere business owners is when they are able to be self-sufficient. Endeavor Mentors would also add that, if the entrepreneurs are not bringing in healthy profit yet, that funding will be the most expensive cash they have ever bought. On the other side of the coin, if they do bring in healthy profit, and cash flow is fluid - entrepreneurs must go back to the star question: what is the money for and how would it help scale the business and not just sustain. Ask: How will raising a certain amount of money contribute to scale the business in the next 5 years? Go further, stretch the margin.

Strategising Your Next Move

Explore your gray matter, the business’ gray matter. Determine what you are going to do with the money, explore other routes and platforms for growth. Of course there is no one right shoe to fit all, but the bigger concern here is when the focus of fundraising is not in hindsight. A lot of entrepreneurs are going into fundraising because everyone has their eyes set on who is raising more or from where - making it into a fun rendezvous for the public. More often than not, the money received must be given back - and that is when it’s dangerous if a focus is not aligned. Entrepreneurs would end up owing more than gaining. Next step into not making a big mistake: if there are reasons not to fundraise, don’t. Grow and operate differently.

Fundraising may be appealing, but only if entrepreneurs are able to reap what they sow out from it.