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4 Reasons Self-Funding Can Make You Jordan And Not Lebron

6/19/2017

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By Tom Alexander, CEO of PK4 Media 

Fresh off his fifth NBA Finals loss, LeBron James is still by far the best player in the NBA today, but Michael Jordan is widely considered the best player of all-time.  
This distinction is not only because Jordan has more titles, it is the way in which he won them and it correlates to an entrepreneur’s decision on whether to self-fund or seek outside investment.   

Mixing metaphors for a minute, Jordan achieved success through ‘bootstrapping.’  He played for one team, overcame losses and became a six-time Champion on his own terms.  On the other hand, James figuratively accepted “VC Funding” to win when he had to switch teams twice to play alongside other superstars. 

It has become a bit cliché, but back when The Social Network came out in 2010, Justin Timberlake delivered my favorite movie line of all-time, “A million dollars isn't cool, you know what's cool…A billion dollars.”

That line hit home with entrepreneurs because social media and digital technology was the new frontier, the new gold rush and the possibilities were endless.

When an entrepreneur takes that leap of faith, quits their steady job and starts a business, they typically have a clear vision of what their product or service will be -- prepares to launch a company they have a firm understanding of what their product or service will be.

Figuring out how to fund their new venture is another issue entirely, and one that keeps people up at night. There are many pros and cons to weigh when deciding whether to self-fund or seek outside investment and it is a difficult decision.

As the CEO of PK4 Media – a digital advertising startup I founded in 2009 – I live this struggle first hand.  Having grown up in Silicon Valley the son of a Venture Capitalist, I see both sides of the issue but have consciously self-funded. 
Here are the top 4 reasons entrepreneurs should reject VC funding:
  1. To Carry Out Your Vision Exactly How You See Fit: If you choose to self-fund, you will have full control. Resources may be tight but if you can succeed this way you will be able to execute your vision exactly how you see fit.  GoPro CEO Nick Woodman is a great example of an entrepreneur who famously bootstrapped.  While VC funding can provide the resources necessary to take your company to the next level immediately, they often come with too many strings. Earlier this year, CB Insights reported on the 108 Costliest Startup Failures of All-Time.  There are too many instances in which a VC partner, with no industry experience, ruined a great startup by interfering in things they know nothing about.
  2. To Remain Passionate Every Day: Venture Beat reported that angel and seed-stage startup deals were down in Q1 of 2017. Seeking VC funding is a full-time job and is not always a passion project.  Entrepreneurs are money motivated but the successful ones usually want to make a difference with their lives and positively impact society.  As Steve Jobs once said, “People with passion can change the world.”  From personal experience, when an entrepreneur experiences success, they cannot get dressed fast enough the next morning to get to work and to take their company forward.
  3. To Spend Money Wisely and Grow Organically: We keep hearingBeepiCNN reported
  4. To Remain Nimble and Avoid Board Approvals: The contentious and protracted Board of Directors fight at Yahoo is a stark reminder about what can happen when you let a fox into the henhouse.  If that is not enough, watch the scene in the Steve Jobs movie where he gets fired from his own company.  Outside funding and the formation of Boards can turn your flourishing and nimble startup into a corporate nightmare.  The ability to make acquisitions, personnel decisions or product investments can become arduous and stagnate company growth.

While most entrepreneurs begin with a clear idea, the decision of how to financially make that dream a reality is a universal struggle.  While there are two sides to every coin, above were four solid reasons to reject outside funding.  There is more than one way to succeed, but if you can succeed through self-funding, you may just become the Michael Jordan of your industry.   



About Tom Alexander
 
Tom Alexander is the Founder and CEO of PK4 Media. Founded in 2009 as the advertising industry’s first Omni-Channel Media Company, 15-time award-winning PK4 Media uses proprietary technology that enables brand campaigns to serve and collect data from 200 million unique consumers across an unprecedented eight digital channels: Desktop, Mobile, Tablet, CTV, VOD, In-Mall, In-Theater and Digital-Out-Of-Home.
 
Headquartered in Los Angeles, the company has a click-through rate four times the industry average and a 93% client retention rate with world-class clients including: Activision, Amazon, Bacardi, Esurance, Ford, Honda, KitchenAid, Lionsgate, Microsoft and Procter & Gamble. 

Alexander has led PK4 Media to become a two-time Forbes Most Promising Company, three-time Inc. 500/5000 winner, Deloitte’s Technology Fast 500 winner, among others.​

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