If you want to start a new side hustle or business, you’ll probably need some money to get it off the ground. Don’t seek out an investor, says billionaire entrepreneur Mark Cuban.
Instead, make sure your idea can be profitable from Day 1, and use the proceeds to grow your venture. “I was always geared towards profitability, not geared towards just getting my next [fund]raise,” Cuban, 64, told the “Bio Eats World” life science podcast on Tuesday.
Cuban — who is, notably, an investor on ABC’s “Shark Tank” — launched his first tech company, a computer systems startup called MicroSolutions, using his own money. At age 32, he sold the business for $6 million in 1990.
In 1994, Cuban and his friend Todd Wagner invested $10,000 in a small startup called Cameron Audio Networks. They later offered the company’s ownership a buyout, absorbing the majority of its equity and turning it into Cuban’s second company, internet radio streamer Broadcast.com.
That company sold to Yahoo for $5.7 billion in 1999.
For many entrepreneurs, raising money can feel like a requirement. Three in five Americans say they’ve come up with a great idea for a business — but 92% of them haven’t followed through, mostly due to a lack of funding, a 2021 Zapier report found.
When Cuban has raised money, it was out of “necessity,” he said: “I’ve always tried to teach entrepreneurs that raising money or borrowing money is not an accomplishment. It’s an obligation.”
The billionaire gave similar advice during a SXSW panel in March, telling people to use their own personal savings instead of taking money from others. That way, you’re “controlling your own destiny,” he said. “The more of your equity that you can retain and control, the more the upside.”
As such, Cuban is picky about the startups in which he invests.
“What really gets me going is when people have an operating business where they’ve already gone for it. And they’ve invested everything,” he told TV Tango in 2011. “They’ve put their heart, their soul, their time, everything that they have available to them into the business. And they’ve laid it on the line. And they just need a little bit of help.”
Following Cuban’s advice can be easier said than done, some experts say.
“I work with many business owners who are rich on paper, but have very little in the bank account,” Ryan