In the startup world, especially when you’re just beginning, the name of the game is often “scrappy.” Limited resources mean you have to be incredibly resourceful. This approach to building a business, doing more with less, is often called “growth hacking.” You’ve probably heard the buzzword. It’s essentially code for: “Figure out how to get customers without spending a lot because, let’s face it, you’re broke.”
For many startup founders, growth hacking isn’t a strategy; it’s survival. That was certainly my experience. When I launched my first companies, cash was nonexistent. Time was all I had, so I had to use it as creatively as possible to attract customers. This crash course in resourcefulness and frugality served me well when I was running a tiny startup. I remember vividly stretching a small seed grant to keep my company afloat for months. However, I didn’t realize then that my intense focus on growth hacking and extreme frugality was actually teaching me bad habits – habits that would make scaling my startups into truly successful, money-making businesses much harder.
Don’t fall into the same trap. You might be running a small, underfunded startup right now, but if your goal is to build a real company and, ultimately, learn How To Have Money Fast through sustainable business growth, you’re going to have to learn a counterintuitive lesson: spend money to make money. For entrepreneurs wired to only think about growth hacking their way to revenue, this transition is more challenging than you might think.
Growth Hacking Wins, Fundraising Fails
One of my early ventures was a B2C company. We were masters of growth hacking, scaling to almost 3,000 paying customers using mostly guerilla marketing tactics – think online forum engagement, social media automation (back when it was less sophisticated), and good old-fashioned word-of-mouth. We even managed to snag some press by building relationships with journalists. Crucially, none of our customer acquisition strategies cost us any significant money.
After about a year, we had generated a respectable amount of revenue and, in my eyes, boasted an impressive growth trajectory. My plan was to head to the West Coast, where investors seemed more receptive to our type of company, and leverage our scrappy, growth-hacked success into a $3 million seed round. This felt like the golden ticket – how to have money fast, startup style.
I spent a month meticulously scheduling nearly 30 meetings with angel investors and venture capitalists across the West Coast. I orchestrated an intense, two-week fundraising trip through Silicon Valley, averaging three pitch meetings each weekday.
Leading up to the trip, I poured weeks into crafting what I believed was a killer fundraising pitch, designed with the perfect crescendo to hook investors. After presenting our total paying customers and revenue figures, I would dramatically unveil a simple slide, the piece of information I was sure would make investors clamor to invest. The slide was something like this:
As I revealed the slide, I’d confidently state, “And the best part? We achieved all this growth without spending a single cent on advertising.”
To me, this was our ultimate differentiator, the reason we were a smart investment. We had embodied the startup ethos: a creative, scrappy, lean, and hardworking team that acquired customers without spending money.
“If we’ve accomplished this much with zero ad spend,” I’d say, building to the pitch’s climax, “imagine what we can achieve with more resources!”
That was my core message to the West Coast: strong initial customer base, solid revenue, and minimal customer acquisition costs. I was convinced this was the kind of company that gets funded.
I was completely wrong.
Growth Hacking Doesn’t Equal Investable Growth
Armed with my message of impressive growth and negligible CAC, I presented to nearly 30 investors in Silicon Valley. Two weeks later, I returned home without funding and with a significantly deflated ego. My dream of learning how to have money fast through venture capital was quickly fading.
What went wrong? How could thousands of customers, hundreds of thousands in revenue, and a minuscule customer acquisition cost fail to attract venture capital?
The answer came in my final West Coast meeting, with a VC from a smaller seed fund. By that point, it was clear the trip was a failure, and there was a fundamental flaw in my approach. Still, I had the meeting scheduled and figured I needed the practice. I went to his office, delivered my pitch, and braced myself for yet another rejection.
“Great pitch,” the VC said. “This seems like a strong opportunity.”
“Thanks,” I replied, a flicker of hope igniting. “I believe we’re doing really good work, and we have a real opportunity to scale with capital.”
“Maybe,” he said, pausing, “but I’m guessing you haven’t had much luck fundraising.”
“No,” I admitted, my hope dwindling. I was puzzled by how he had discerned my fundraising struggles simply from my pitch.
“That doesn’t surprise me,” he stated.
“Why is that?” I asked, recognizing he understood something crucial I was missing. “I genuinely feel we should be a great investment. We’ve already acquired so many customers without spending money. Isn’t that a positive? I thought investors would be eager to fund us. We’ve clearly proven market demand and some level of product-market fit.”
“You’ve demonstrated some market demand,” the VC conceded, “but the problem is you haven’t proven you know how to have money fast – or rather, how to get customers at scale, which is what leads to fast revenue growth.”
“But we do have proof!” I insisted. “We have almost 3,000 customers! How many customers do we need to show before it’s compelling evidence? 10,000? 20,000? What’s the magic number?”
“There’s no magic number of customers,” he explained. “That’s where many entrepreneurs misunderstand. They think impressing investors is about flashing a large customer count. But that’s not the point. What truly matters is how you acquire your customers.”
“But I explained how we got them,” I reminded him. “I detailed our growth hacking strategies in my pitch.”
“And that’s precisely the issue,” the VC clarified. “None of your methods are repeatable or scalable in a way that justifies significant investment. Yes, your growth hacking worked. But so what? It didn’t require capital. That’s good for your early stages, but my role as an investor is to provide capital that fuels scalable growth. Right now, if I invest, how do we know the money will have any impact? What evidence do I have that you can effectively utilize my investment to scale?”
“I guess I don’t, not really,” I admitted, the realization finally hitting me. “I was so focused on the number of customers, I completely overlooked the fact that we hadn’t acquired them in a way that investors see as… investable.”
“Exactly,” the VC said. “As an investor, I’m not just interested in a good business. I need to see how my investment can grow that business. So, when I see a startup growing without capital, it doesn’t excite me. It actually worries me. It signals a startup that doesn’t need funding to acquire customers through sustainable channels. If anything, I worry my money will be mismanaged. It’ll just add cash to the bank, tempting founders to spend it on things that won’t generate predictable returns, which is the opposite of how to have money fast in a scalable way. If you can’t demonstrate how you’ll productively use investment to scale customer acquisition, it’s a no-go, regardless of how promising your startup seems.”
Real Companies Invest to Grow
That conversation remains vivid in my memory because of its profound impact on my entrepreneurial development. The VC illuminated the type of growth investors seek – paid, predictable, scalable growth – because it’s the only growth model that demonstrates a clear, long-term, and sustainable return on investment. This is the foundation of how to have money fast in the business world: sustainable growth.
Whether seeking funding or not, as an entrepreneur, I needed to prioritize this same type of growth. While frugality and growth hacking are essential in the initial stages, every growth hack eventually hits a scalability ceiling. When that happens, companies must transition to traditional customer acquisition strategies employed by larger companies – strategies that require significant investment, such as paid media, advertising, and dedicated sales teams.
As a naturally frugal founder, spending heavily on marketing, advertising, and sales felt deeply uncomfortable. Looking back, overcoming this discomfort was one of the most significant hurdles I faced in building my startups. In fact, this reluctance nearly led to the failure of more than one of my ventures.
As your startup evolves, prepare for a similar challenge. You can’t remain perpetually lean and scrappy. As your company gains resources, you, as the founder and leader, are responsible for deploying those resources effectively. After years of bootstrapping and penny-pinching growth hacking, investing significant capital to scale your company will feel unnatural. However, as your startup matures, your mindset must shift. You need to learn to spend money strategically in order to generate sustainable revenue and, ultimately, learn how to have money fast through long-term business success.
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Aaron Dinin teaches entrepreneurship at Duke University. A version of this article originally appeared on Medium, where he frequently posts about startups, sales, and marketing. For more from Aaron, you can also follow him on Twitter or subscribe to Web Masters, his podcast exploring digital entrepreneurship.
