Wednesday, November 19, 2008

Is It All About Them Benjamins Baby

Social Media Start Up Taking Angel Fundingphoto by DavidDMuir

It's no secret that the startup life is hard. Jun Loayza and I have traded war stories over the past few weeks on the late nights, the relationship strains and the "damn I wish I had some Taco Bell money right now."

That brings us into a struggle I've had with my company over the last few months. To take, or not to take angel funding. In the beginning of the whole creation of Endagon Innovations, we were set on being a web application company that had clients to subsidize the money going out on development. As the summer ended and funding opportunities started to dry up, I started seeing more of a need for client services in SEO and Social Media.

Small businesses were starting to catch the wave, more and more younger employees were starting to take leadership roles in local companies and mainstream media started to jump in on the craze (Twitter + Current TV for the elections). It seemed an opportune time to look into helping businesses listen to conversations and find ways to improve their brand message, communication platforms and recruitment strategies.

As this switch in a business approach came about, our overhead should have been reduced. Did we possibly make a mistake in taking on office space and extra employees too early? Unfortunately I think so. While my team kicks ass and works even harder, I often think about running a smaller operation as we get our feet wet and build up advocates and a bank account.

Then comes the questions of funding
Now that we are 80%+ client side, I have voiced my opinion about staying away from funding. With fewer lenders to choose from and an above average interest rate, it would be ill-advised to take in funding and put our company into debt during the biggest recession in our country's history.

I understand the immediate freedoms, don't get me wrong. I'd love to actually get a paycheck from MY company and maybe even be in the office during business hours. However, I would rather build it debt free and have the freedom to make choices and business decisions based on our own goals and paths, and not of those that would benefit an investor or make us second guess to make sure we have their payments on time.

Do I think we will be successful either way?
Hell yea. We are in a prime position to create a great buzz around our services and find a niche that we can dominate for long term success. Does it mean living close to broke for a few more months? I think so.

So where does this leave us? I am not sure today, I might not be sure tomorrow. I might change my mind if someone waves 6 figures in front of my face. Or I might tell everyone on my sales team that they will get a super bonus if you can find a client willing to believe in us so much that they will allow us to take on a 6-figure contract to make their company better through the belief in Social Media and Search Marketing.

So help me out. Sell out or DIY? It's like deciding on a record contract, something that I still haven't ruled out! ;)

-Greg Rollett

2 comments:

Norcross November 20, 2008 at 5:45 PM  

If it were as easy as picking one or the other, you probably wouldn't have written this. One thing to consider:

1. if the business doesn't pan out, who's on the hook for the debt?

2. can you grow at the rate needed without it?

Greg Rollett November 20, 2008 at 6:05 PM  

@Norcross - You got it man. It's been a back and forth battle for months now. To answer your questions:
1. I do not want to be responsible for that!
2. We can grow the agency side and that is the direction I want to lean towards. Matt made a good point and one that I have brought up in that most agencies/consultancies do not take in funding. They build it one client at a time. That is how I have always operated and feel safer going that route.

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