Mark Cuban: "Don't raise money". 30 things founders miss about VC (and the only times you should)
Why Mark Cuban Told Me to Never Raise Money — And What Founders Miss About Venture Capital
last week i had a chat with Mark Cuban.
I told him my business is growing little by little and that i wondering if should raise money
i built a venture backed startup (failed) and then worked as a VC so my life for the last 6 years have been all VC
so, i thought, i have the opportunity to pitch Mark Cuban, let’s ask him when should i raise money
he answered:
“never”
a bit counterintuitive right?
well there’s marketing to everything obviously but i thought it would be interesting to dig deeper and come up with
VC isn’t the only way to raise money. you can also get Venture Debt from founderpath
Want to sponsor PMF Newsletter? Email me at g@guillermoflor.com
the 30 reasons why you shouldn’t raise vc and when you should:
1. Retain Control and Independence:
Taking VC means giving up ownership and control. As Basecamp’s CEO Jason Fried warns, “when you go take money, you’re working for someone else again, instantly.” Founders who value their freedom often prefer to own their destiny rather than answer to investors.
2. Avoid Pressure for Unrealistic Hypergrowth:
VC funding often forces startups onto a “grow crazy-fast” treadmill. Investors expect “intergalactic growth” at all costs, which can stunt a company’s natural development.
3. Build a Sustainable, Profitable Business:
Many founders would rather build a sound, profitable company than play the lottery for a unicorn exit. VC firms, however, only care about moonshots, not steady profits. Bootstrappers can focus on sustainable growth and actual earnings instead of burning cash to chase an unlikely billion-dollar outcome.
4. $10–20M Businesses Are Successes Too:
Lots of companies could thrive as $10–20 million revenue businesses, but with VC you’re “not allowed” to settle for that. Venture funding creates a go-big-or-bust dynamic. In contrast, self-funded companies can be content (and very successful) serving a profitable niche.
5. No “VC Treadmill” of Endless Fundraising:
Raising money once often leads to raising round after round, consuming years of time and diluting ownership. “Hardly anyone ever goes for one round… it’s like you’re going back to the drug dealer,” Fried says of the habitual fundraising cycle. By not taking VC, startups avoid being stuck in survival mode awaiting the next check.
6. Save Time and Focus – Fundraising Is a Major Distraction:
Founders routinely report that fundraising is practically a full-time job, taking months of pitches, decks, and meetings. Mark Cuban calls it an “obligation” rather than an achievement – one that diverts precious focus from product and customers.
7. Keep More of the Wealth You Create:
The longer you can go without raising, the more equity remains with the founders and early team. “The longer you can hold out before you raise money, the richer you are going to be,” says Mark Cuban. Every VC round dilutes your stake; bootstrappers who eventually succeed enjoy a far greater share of the reward.
8. No Unwanted Bosses or Board Interference:
Venture capital typically comes with a board seat or investor oversight. This can mean ceding strategic control. That overhead is only worth it if the cash is truly necessary.
9. Stay Customer-Focused, Not Investor-Focused:
With no outside investors, your only “boss” is your customers. Generating revenue from real users forces you to make something people actually want, which is the essence of a good startup.
10. Raising Money Is Not Success in itself:
It’s easy to equate a big funding round with success, but “raising money is not an accomplishment, it’s an obligation.” Funding is a means to an end, not the end itself.
11. Avoid Premature Scaling:
In Paul Graham’s experience, “hiring too fast is by far the biggest killer of startups that raise money.” Flush with investor cash, founders often over-hire and overspend.
12. Prevents Wasteful Spending and Instills Discipline:
When a startup has a huge bank balance from VC, there’s a temptation to spend freely. Constraints make teams scrappier and more creative.
13. Keep a Long-Term Founder Mindset:
Raising excessive capital can turn a founder into a mere manager of investor money. Staying small until you get it right keeps your creativity alive.
14. Preserve Your Startup’s Mission and Values:
Outside investors might pressure you to pivot away from your original mission. Founders who bootstrapped often credit their independence for letting them stick to their values.
15. No Forced Exit Timelines:
VC funds operate on 5–10 year cycles and need a return, which means your company must have a liquidity event (sale or IPO) on someone else’s timetable.
16. “Smart Money” Often Isn’t So Smart:
The only guaranteed benefit of VC funding is the cash. The extras – mentorship, connections, PR boost – are not assured at all.
17. Most Startups Will Never Get VC Anyway:
Less than 1% of startups raise venture capital. Chasing investors can be a dead end for most founders.
18. Crowded Markets Require Grit, Not Pitches:
If you’re in a crowded or unfashionable industry, VCs will likely pass on you anyway. You’re better off proving yourself through traction.
19. Avoid the Vanity of Big Funding Rounds:
Some founders seek funding for the wrong reasons – ego, press releases, or a false sense of “making it.”
20. Less Red Tape and Reporting:
Without outside investors, you won’t have formal board meetings or onerous investor updates. You can run the company on your own terms.
21. Learn the Skill of Making Money (Early):
By focusing on earning revenue instead of spending investor cash, “you learn the skill of making money,” which makes for a healthier, lasting business.
22. Keep Company Culture Intact:
Hyper-growth fueled by VC can quickly change a startup’s culture – often not for the better.
23. Better Work-Life Balance for Founders and Team:
Bootstrapped companies can grow at a “sane pace” and avoid the relentless overtime culture of VC-backed hypergrowth.
24. Freedom to Say No (or Yes) to Acquisition:
When you’re beholden to investors, turning down a buyout offer can be hard. Staying independent means you decide if and when to sell.
25. Real Feedback Loops – Reality Check:
Operating on your own revenue forces immediate feedback from the market. Bootstrappers confront reality early and often, which produces stronger businesses.
26. Don’t Sell Yourself Short (Equity is Expensive): ç
Raising money too early can mean giving away a huge chunk of your company for very little.
27. Pivot on Your Own Terms:
If you haven’t raised money, you can pivot quietly without worrying about disappointing investors.
28. Avoid the High-Valuation Trap:
Raising money at a sky-high valuation might sound great, but it sets a bar that your startup must clear or face a dreaded “down round.”
29. Option to Stay Private and Happy:
Venture-backed companies don’t have the luxury of staying private indefinitely – investors need an exit.
30. Hungry Teams Innovate More:
Constraints breed creativity. Staying lean forces you to “do things that don’t scale” and find unconventional growth hacks.
When you should raise money (by Billionaire Daniel Lubetzki)
We asked Daniel Lubetzki, founder of Kind Snacks (acquired by Mars for 5 Billion) when we should raise money. His answer was short but good:
1. When speed matters more than ownership:
You’re in a winner-takes-all market — social, AI infra, logistics, marketplace — and whoever scales first wins. Capital buys time and distribution.
2. When you’re building something truly capital-intensive:
Hardware, biotech, semiconductors, energy, space — anything that requires years of R&D or factories. These are not bootstrap businesses.
3. When the opportunity window is closing fast:
Timing is everything. If the market is exploding now (like mobile apps in 2010 or AI agents in 2025), waiting a year might kill you. Money buys speed.
4. When your startup is already default alive but funding makes it default dominant:
You’re profitable or close to it, but capital could cement your position — building moat, hiring key talent, or acquiring competitors.
5. When the market you’re in is a land grab:
Network effects, supply-side lock-in, or limited partnerships mean being second doesn’t matter. Capital helps you capture the map before it’s drawn.
6. When you know the investors bring more than cash:
Distribution, credibility, deep domain expertise, or access to customers that you couldn’t buy. If the investor is a force multiplier, it’s worth dilution.
7. When your ambition is global and high-risk by design:
You’re chasing a moonshot — building something with massive technical or societal upside where the risk/reward profile matches VC math. Think OpenAI, SpaceX, or Stripe.
8. When staying independent would mean getting crushed:
Competitors are raising hundreds of millions and locking up distribution, talent, or data. Strategic VC can level the playing field.
9. When you want to build something bigger than yourself:
You’re okay with losing control if it means realizing a mission that outlives you — curing disease, decarbonizing energy, reimagining communication.
10. When you can raise from the right terms, at the right time:
The best founders raise from strength, not need — when metrics, story, and market all align so you can choose partners, not saviors.
11. When you need scale for unit economics to work
Hope this was valuable :)
Let me know if you are raising!
Best,
Guillermo
Should You Raise Venture Capital or Stay Independent?
1. Why did Mark Cuban say “never” when asked when to raise money?
Mark Cuban’s advice — “never” — is rooted in the idea that fundraising should never be your goal. Raising money means giving up control, focus, and equity. Cuban believes founders should prioritize building a profitable, self-sustaining business before ever considering external capital.
2. Why shouldn’t founders raise venture capital?
Founders often regret raising VC because it leads to pressure for hypergrowth, loss of independence, and endless fundraising cycles. You start working for investors instead of customers. If your goal is freedom and sustainable profits, VC money can easily pull you off course.
3. What are the main reasons not to raise venture capital?
There are dozens — but the top ones include:
You lose control and ownership.
You’re forced into unrealistic growth expectations.
Fundraising is a huge distraction.
Profitability becomes secondary to valuation.
Investors might push you toward exits or pivots you don’t want.
(You can read the full list of 30 reasons in the article.)
4. When should a founder consider raising money?
Only when capital truly accelerates an already working business model. For example:
You’re in a winner-takes-all market (AI, marketplaces, logistics).
The opportunity window is closing fast.
You’re in a capital-intensive industry (biotech, hardware).
You’re profitable and funding can make you dominant.
The investor brings strategic value beyond money.
5. What’s the difference between bootstrapping and raising VC?
Bootstrapping means building your company from revenue — focusing on customers, profitability, and control. VC means exchanging equity for rapid scaling and high-risk growth. Bootstrapped founders retain independence; VC-backed founders trade control for speed.
6. How do I know if I’m in a “winner-takes-all” market where I need VC?
You probably are if:
Network effects make early scale hard to catch.
Competitors are locking in distribution or data.
Speed to market is the main moat.
Think social networks, AI infrastructure, marketplaces, and logistics — whoever scales first wins.
7. What are alternatives to venture capital?
Alternatives include venture debt, revenue-based financing, or platforms like Founderpath that let you raise non-dilutive capital. These let you grow faster without giving up equity or control.
8. Why do so many founders regret taking VC money?
Because the incentives often misalign. Investors want a 100x outcome within 7–10 years. Founders might just want a $20M profitable business and a great life. Once you raise, your destiny is tied to investor expectations — not your own.
9. Is raising venture capital a sign of success?
No. Mark Cuban says, “Raising money is not an accomplishment — it’s an obligation.” The true milestone is building a business people want, not convincing investors to fund it.
10. When is the “right time” to raise money?
When you don’t need it. The best founders raise from a position of strength — when metrics, story, and market momentum are aligned so they can choose investors on their own terms.
11. What’s the best question to ask before raising money?
Ask yourself: “Does more capital make my business better — or just bigger?”
If the answer is only “bigger,” it’s probably not time to raise.
12. What’s the most common mistake founders make with fundraising?
Raising too early. When you take capital before product-market fit, you build a company to please investors instead of customers — and often scale what doesn’t work.
13. Can a profitable business still raise venture capital?
Yes — but it should do so to become dominant, not to survive. If you’re already profitable, raising money can help you capture market share faster, build moats, or acquire competitors — not plug cash flow gaps.
14. What’s Mark Cuban’s advice for founders about wealth and dilution?
Cuban often says: “The longer you can hold out before you raise money, the richer you’re going to be.” Every round you avoid means keeping more of what you build.
15. What’s the biggest mindset difference between bootstrapped and VC founders?
Bootstrapped founders think in decades. VC-backed founders think in fund cycles. One optimizes for independence; the other for exit velocity.
Incredible interview!
You know the big issue I’ve had for a while with this, are the folks on here AI generated, are they real people, are they 😎? There’s a fourth aspect to what I’d like to build in my square project. I’d like to work with you to get this part done. Based on your posts I think it’s what you’d be most interested in. Are you open to working with me G?