In this YouTube video, entrepreneur Evan Carmichael answers a novice entrepreneur’s request for funding advice. He argues that early fundraising, especially for tiny amounts like $5,000, is counter‑productive because it consumes time, forces a low valuation, and can lead to guilt if the venture fails. Instead, he recommends bootstrapping: start with a service, engage directly with customers to validate demand, and use "love money" from friends or family—or modest crowdfunding—only if absolutely necessary. Carmichael stresses that investors only offer favorable terms after a founder has demonstrated momentum, a working product, and paying customers. He shares his own venture‑capital background to illustrate that most funded startups already have proof of concept. The core message is to focus on customer discovery and revenue generation first, then seek expansion capital once the business shows traction.
Don't raise money until you have a real business and you have some momentum behind you. Otherwise you're going to get killed on your valuation and it's going to chew up all of your time, not giving you anything to work with to build your business. Hi, I'm Evan Carmichael. I believe that hungry entrepreneurs deserve help, and today I'm answering a question from one of my newsletter readers, Norman, who wrote in to say, "Good afternoon, Mr.
Carmichael. My name is Norman. I'm a novice entrepreneur." "I've been trying to get into entrepreneurship for a little over 3 years now. I graduated college, I wanna start my business. I need $5,000 for capital for software and coaching. I know it doesn't seem a lot, but I can't come across the money. I was hoping you could give me some direction, tips, point me in the right direction.
Hope to hear from you soon. Norman." Norman, raising capital sucks, okay? It takes up a lot of your time, it doesn't let you focus on your operations. And you get killed on the valuation. Now first of all, if you're only raising $5,000, really the people who you should be talking to are friends and family. It's called love money. You're not gonna go out and get an investor to put $5K into your business. You may be able to crowdsource fund it on sites like Kickstarter, but really at that low amount you're looking at friends and family, people who are in your network, you know, even distant friends who you haven't connected with in a while can often be great sources. But I don't think you need the money. You gotta just start up. Start with a service. Start talking to customers. Get them to see the value that you can provide and help you build a business around their needs. If you've been wanting to start a business for 3 years, you gotta just start it. I don't want you to wait another 3 years, another 3 years, and you end up in some job, you know, stuck in corporate life, and you're not— you're never able to break free of it. Get started. Start small. Start a service. Go talk to your potential customers. Find out what they need help with and build a product or service around them. You don't need software. You don't need coaching. Just start talking to your customers. Here's the flip side, okay? If you say, "I really need this money," what's gonna happen? You need to spend a lot of time to go out and talk to these potential investors, right? If it's your friends or family, or even if you try to get investors interested, which is gonna be really hard for $5K, You're gonna take so much of your time doing this when instead of pitching investors you could be pitching customers. Next, you don't even know if this idea is gonna work or not. Okay, going to pitch investors with just an idea rarely works. They could put money in and you could lose your shirt and you're gonna lose their money. And imagine you borrowed money from your uncle or your sister or whoever it is, some distant friend of yours it doesn't work out, you're gonna feel pretty guilty. I don't want that for you. It's better to invest the time into understanding your customers and seeing what they want so that when you actually go and raise money, it's to build it around something that there's a need for. People have said, "Hey, I really want this. Help me." And the third thing is you're gonna get killed in your valuation. If you're giving up equity in your business, they're gonna take a huge chunk. Because it's risky. What are they buying? Nothing. A promise, a dream. When you go out and raise money, you want to do it on the best terms possible, and that's going to come after you have some momentum. The easiest type of money to raise and the cheapest is expansion capital. You've shown that you can, you can build something up on your own. You may not be making huge money, it's not glamorous, but you've shown that people will pay you for what you do. Once you've proven that, you've separated yourself from 99.9% of all the other businesses that investors will see. I used to be in the venture capital game, and most of the people who gave us their business plan had nothing, had an idea, and those guys were not the ones who got funded. The guys who got funded were the ones who already had some momentum. They already had their product or service built. They already had people using it, some people paying them. They had proof of concept. They had momentum, and they needed money to expand. That's where you want to get to. It's entirely possible to bootstrap this up. Spend your time talking to customers, not even selling them, just getting to know them, getting to know their pain points, understanding how you can help them. And have your customers help finance the start of your business. If it's around a service, it's just your time. You don't need anything. You don't need software, you don't need consulting. Just get out there and start talking to customers, and they'll guide you along your path. Good luck. For those of you watching, you like this video, please give it a thumbs up below. Makes me wanna do more for you. And hey, if you have a comment about this video, I'd love to hear from you. Leave it in the comment section below. Or if you have a question about your business, I always read those. I really love seeing the questions, the comments come in every morning. So thank you guys, and I'll see you on the next episode.
