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Raising venture capital funds can put a timeline on your startup and limits flexibility

Harry Alford

Co Founder, Humble Ventures

Once you take on funding, your investors become the customers. Tesla’s Elon Musk agitated Wall Street when he recently tweeted considerations to go private at $420 a share, saying it would be beneficial to remove short-term pressures. Musk explained:


“Being public also subjects us to the quarterly earnings cycle that puts enormous pressure on Tesla to make decisions that may be right for a given quarter, but not necessarily right for the long-term.” — Elon Musk


Growth or Profitability?

Raising venture capital (VC) and going public have been exceedingly glorified and VC appetite for unprofitable startups is intensifying. The proportion of companies reporting losses before going public in the US is at its highest since the year 2000. Shareholders value growth, valuations and exits — often preventing startups from focusing on their priorities: customers, revenue and profitability.


Musk isn’t the only founder who’s expressed interest in going/staying private and being free of investors high-growth expectations. In fact, many startups are ditching the venture model and buying out early investors or deliberately forgoing VC all together. Instead, they are bootstrapping, being customer funded and growing their companies while maintaining a majority of equity. In some cases, leading to a merger or acquisition. Below are several recent examples of successful startups that have said no to VC money:


Tuft & Needle

Tuft & Needle is a direct to consumer mattress brand founded in 2012 by Daehee Park and JT Marino in Phoenix, Arizona with only $6k of their own money. Tuft & Needle has taken on no outside investment, generating $170M in sales last year. Tuft & Needle will be merging with legacy mattress company, Serta Simmons Bedding, increasing both brands ability to serve consumers online and in-store. But Serta Simmons’ CEO, Michael Traub, said what he loved most about JT and Daehee is, “they have created a bootstrapped, sustainable company.” This merger is validation that not only can you scale without taking on outside investment, but that your ability to bootstrap can be an attractive skill to acquirers.



Buffer is a social media management platform trusted by brands, businesses, agencies and individuals to help drive social media results. Buffer raised funding, but later realized they evolved “out of fit” for VC. After creating financial stability by growing their profit margin and putting them on a path for sustainable and long-term growth, Buffer just spent $3.3M buying out their main VC investors. On the company blog, Buffer CEO Joel Gascoigne, also noticed that growing at all costs can dampen team morale saying, “I’m confident that the small business market is still wide open for Buffer to continue to grow, and I’m committed to continuing to build great products our customers love and cultivate a workplace culture of trust, freedom and flexibility.” Having the freedom to operate on their own terms without anyone peering over though shoulder was a state of comfort they couldn’t pass up.



Since raising $300K on Indiegogo in 2013, MVMT has been disrupting the overpriced watch game with over 1.5M items sold to date. The reputable Movado Group just announced their acquisition of MVMT for $100M. The best part, MVMT’s management team and 40 employees own 100% of the startup. Despite seeing other direct to consumer brands like Harry’s and Warby Parker raise VC, MVMT just didn’t see the point. MVMT’s CEO, Jake Kassan, told Recode about the negatives to raising funding rounds, “Once you do it one year, you have to do it next year; it becomes this bad cycle. I think having the discipline and flexibility was just the secret for us all along.” Answering to investors and meeting their expectations instead of focusing on designing beautiful products would be a distraction. Despite many offers to inject capital into their business, MVMT exercised prudence when it mattered most.


When cash is a constraint to growth, then capital can be a good thing. However, a majority of startups shouldn’t seek VC funding because it puts a timeline on your business and limits flexibility. VC money isn’t always a requirement for scaling or exiting a successful startup either. As Rachel Thomas, Co-founder of, articulates, “VCs often push companies to grow too quickly, before they’ve nailed down product-market fit and monetization. Growing at a slow, sustainable rate helps keep your priorities in order.” Owning more equity without VC pressure, growing at your own pace and staying private as long as possible should always be the optimal path for founders.

Harry Alford

Co Founder, Humble Ventures