Easy to Raise Money - A Bad Thing?

If raising money was easy, would it be a bad thing?

Well, according to Bob Johansen, in his book "Get There Early," the tension between people with ideas and people with money provides the energy for innovation.

He further states that if this dilemma were solved, that creative energy would dwindle.

Now, I don’t necessarily agree with this, because the reason why entrepreneurs go into business is NOT to raise money.

Rather, that majority of entrepreneurs go into business for other reasons. For example, according to a recent survey by Grasshopper, 44% of entrepreneurs started their business since they “saw an opportunity to make something great.” Eighteen percent started their business “to fulfill my life dream.” And 7% started “to help others/give back.”

But, raising money is a necessary evil for most entrepreneurs.

And, I do agree that if it were too easy to raise money that it would be a bad thing. Why? Because there would be too much competition.

I often give my barber example to explain this. I grew up in a small town called Rockville Centre in Long Island, NY. The town had about 30,000 residents and two barber shops.

Well, what if raising money was too easy and 8 new aspiring barber shop owners each opened up stores. That would make 10 barber shops in one small town. Clearly the market couldn’t support that. And most likely virtually all the barber shops would go out of business (and the last one standing may not have been the best one, but the one with the most money in its coffers).

So, if raising money was too easy, there would be too much competition.

But, should raising money be as hard as it is? Clearly not.

And it isn’t if you invest in learning how to raise money. I see raising money as similar to someone passing the bar exam. Passing the bar exam is not about knowing what’s wrong and right (which is what the law should be about). It’s about doing your homework and understanding how things work. It’s the same thing with raising money.