Saying no to $30 million in funding – is hyper-growth without external funding possible?

Editor’s note: this is a guest post from Guillaume Moubeche, the French entrepreneur and co-founder and CEO of lemlist, after a video explaining why he turned down a $30 million investment (and taking $15 million off the table) went viral, and a great Clubhouse session I did with him on the subject last week. Look up the tech.eu club for more CH goodness.

“Quibi Raises Another $750M…”, “Beepi Raising ‘Monster Round’ to Scale…”, “Jawbone raises $250 million, valuing company at $3.3 billion”.

Sounds impressive, doesn’t it?

These headlines might entice you at first glance, but raising funds isn’t always the key to success.

Most companies’ goal growth rate is 10% month over month, but at lemlist, we are surpassing this growth rate with $0 in external funding.

So how is this possible?

We want to redefine success not as the amount of funds you raise, but instead as the amount of value created for customers.

lemlist isn’t the first company to consider this. You have probably heard of other bootstrapped success stories including GoPro, Patagonia, and Craigslist, all of whom reached millions in revenue before looking for external funding.

You can even find unique stories like Spanx that is 100% owned by its founder, yet has $400 million in annual sales.

These are the types of stories that we at lemlist are trying to bring to light. Success without giving away a piece of the pie.

We want to show that not only is it possible to grow without external funding but in some cases, this can be the key to success.

We have even gone so far as to turn down a VC offer for $30 million. Why? I dove into our reasoning in my latest YouTube video.

Amongst these reasons are some chilling facts of startup failure.

90% of all startups fail, and according to Harvard Business Lecturer Shikhar Ghosh, 75% of U.S. venture-backed startups never return investors’ capital.

Maybe you recognized some of the names in the headlines at the beginning of this article, but these are all companies that have raised quite a lot of funds and ended up failing.

So where are they going wrong?

In the case of Jawbone, it was “death by overfunding”. With a valuation of $3.2 billion, there wasn’t much they couldn’t do, or so they thought. In reality, they ended up overwhelmed with an amount of money they weren’t sure how to handle, and with a product that wasn’t yet up to par.

Another example is what happened with the CEO of Fyre Media, Billy McFarland, who scammed investors out of $26 million.

There are more and more stories coming out lately about the mismanagement of funds or people in the venture-backed startup world.

So how can your company grow if not by raising funds? That all depends on the needs of your company and your ability to make a difference with or without external funds.

At lemlist, we ourselves are an example of organic growth, managing to go from $0 to $5 million ARR in 3 years without a cent in external funding.

This growth is possible by focussing on creating a profitable business with a product that meets the needs of the market.

For us, our keys to success have been to focus on community building and making a product people want by listening to users. My advice is, “The best investor that exists is your clients.”

For companies focused on organic growth, this relationship with clients is vital. One of the most common ways for them to make this possible is through shared spaces between their audience and their brand.

For example, we use our Facebook community, lemlist family, which has more than 13,000 members.

Bootstrapping isn’t always easy, but it is clearly possible. We are hoping to make it a lot easier by making transparency the new normal.

We want to help the startup community and encourage the success of other entrepreneurs. That’s why we have made a goal to help 1 million entrepreneurs build successful businesses by 2025.

The bottom line for us is not that success is or is not external funding. It’s that external funding is not necessarily a guaranteed success, and success for your business can look entirely different compared to another.

Featured image credit: Olya Adamovich / Pixabay

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