Opinions expressed by Entrepreneur contributors are their own.
Key Takeaways
- You can still build a successful, scalable business without high-profile investors. In fact, doing so often allows for greater long-term control and strategic clarity.
- The best business opportunities are hiding in your backyard. Real disruption often lies in solving everyday problems in industries that are overlooked by investors focused on trendier sectors.
- More money sometimes does mean more problems. Taking money means giving up some control to investors who may lack your industry knowledge, which can be challenging.
I’ve met lots of entrepreneurs who were dejected when their pitches to investors didn’t net them a deal. And while rejection can be crushing, I want to offer some words of encouragement to anyone in a similar position:
Your company isn’t doomed to fail without a high-profile investor. If I built Roof Maxx into an eight-figure national brand without one, what’s to stop you from doing the same?
My brother Todd and I launched Roof Maxx in 2017 to provide homeowners with a cost-effective alternative to roof replacement. In the eight years since then, we never sold a stake in the business for startup capital, and it’s probably better that we didn’t.
To drive that point home, here are three important lessons I’ve learned about starting a business that many angel investors miss. Remember these if your next pitch gets rejected — it’s possible that your idea is brilliant, but you’re looking for help in the wrong place.
1. Real disruption isn’t always dramatic
People hear the word “startup,” and they tend to make assumptions. They might think about slick venture capitalists funding software platforms in Silicon Valley, or remember their favorite deals from Shark Tank.
But those are just two kinds of startup stories, and they tend to reflect the exception rather than the rule. For every brilliant invention that wins over a celebrity entrepreneur or major venture capital firm, there are countless others who put everything on the line to make those pitches and still get rejected.
You can forgive people for being a bit hypnotized by glamour. It’s why so many would-be actors move to Hollywood in their twenties, despite the fact that many of cinema’s greatest talents have hailed from far more obscure places.
But being closer to the seat of power is only useful if powerful people take interest in what you’re doing. And sometimes, their priorities are out of step with the lives of everyday people.
The three most likely industries to make a deal on Shark Tank are food and beverage services, health and fashion. Those three categories account for 45.5% of all deals made on the show, while home service only represents 8.1%.
Does that mean a home services business is less valuable? Absolutely not. It just might not be the easiest sell for investors who live in downtown high-rises or work in concrete jungles.
2. The best business opportunities are hiding in your backyard
Instead of clamoring alongside every other hopeful for a handful of opportunities in New York or California, my advice is to look for the opportunities hiding in your backyard. For me, that strategy ended up being practically literal.
Todd and I weren’t tech guys on the coast; we were roofers in Ohio. Before Roof Maxx, we didn’t know that much about software, and frankly might not have been that competitive if we had tried to go head-to-head with people who did.
But we knew about roofing. And when we talked to homeowners in our communities, we realized there was a massive business opportunity hiding out in the open that no one else was seeing.
At the time, nearly every contractor in the industry was pushing roof replacements. Most didn’t even offer repairs. Countless homeowners we met had called other roofers first, trying to get help for relatively minor problems. Instead, those contractors had tried to sell them brand new roofs because those deals made so much more money.
The answer was staring us in the face: Find a cost-effective way to restore and rejuvenate the roofs people already had. I began looking into the idea of using plant-based oils to restore the flexibility in aging shingles, and eventually arrived at the Roof Maxx product, which could add years of usable life to asphalt shingle rooftops for far less than what replacement normally costs.
3. More money sometimes does mean more problems
For many new founders, major capital investments are the stuff dreams are made of. But money isn’t the answer to every business problem. In fact, taking money at the wrong time or from the wrong party can create more problems than it solves.
Remember: Investors have their own ideas about how you should run your company. After all, once they invest, it’s their company too. And if they don’t have the same industry experience you have, the dynamic can quickly become difficult.
That’s one of the reasons Roof Maxx has always remained a family-owned business. We brought in outside talent with the necessary skills to help us expand, but we didn’t give up equity in the company.
Did that approach put millions of dollars in our bank account overnight? Of course not. But it did allow us to make strategic decisions without worrying about pushback from people holding our purse strings. As far as I’m concerned, having that kind of strategic clarity is even more valuable. It’s part of how we’ve been able to grow so quickly in under a decade.
So before you start chasing investors, ask yourself: How much do you really need them? Is your startup the kind where those relationships will help you grow, or can you get farther on your own by focusing on the opportunities close at hand and partnering with the people you already trust?
Sign up for the Entrepreneur Daily newsletter to get the news and resources you need to know today to help you run your business better. Get it in your inbox.
Key Takeaways
- You can still build a successful, scalable business without high-profile investors. In fact, doing so often allows for greater long-term control and strategic clarity.
- The best business opportunities are hiding in your backyard. Real disruption often lies in solving everyday problems in industries that are overlooked by investors focused on trendier sectors.
- More money sometimes does mean more problems. Taking money means giving up some control to investors who may lack your industry knowledge, which can be challenging.
I’ve met lots of entrepreneurs who were dejected when their pitches to investors didn’t net them a deal. And while rejection can be crushing, I want to offer some words of encouragement to anyone in a similar position:
Your company isn’t doomed to fail without a high-profile investor. If I built Roof Maxx into an eight-figure national brand without one, what’s to stop you from doing the same?
