How being a solopreneur is different (and possibly better?) than taking VC money

The eternal debate: solopreneurs vs. venture capital-backed founders

If entrepreneurship is taking on financial risk to start a business, then solopreneurs do all of that alone.

Solopreneurs are individuals that start businesses and wear the founder’s hat, the employees’ hat, and every other hat needed to keep things running smoothly.

Unlike entrepreneurs or founders with co-founders and teams to help them grow and manage the business, solopreneurs operate strict one-person shows. It’s a risky and lonely business, but the rewards are incredibly worth it when it works.

For solopreneurs that make it work, money, time, freedom, and doing what you love on your terms are the reward.

In this article, we look at how solopreneurs differ from entrepreneurs and founding teams that run their businesses backed by Venture Capital (VC) money and why they are possibly better off for it.

solopreneurs working

Solopreneurship vs. Entrepreneurship

Entrepreneurship has many benefits, the top of which is the financial success that comes when you strike it big and your idea pay off.

When most people think of entrepreneurs, names like Musk, Bezos, Zuckerberg Lutke, and several other famous founders come to mind. But for all the billionaires entrepreneurship has created, there are corporate graveyards filled with even more failed businesses upon failed businesses.

Entrepreneurship can be messy. And survivorship bias means you never hear about all the horrible failures and businesses that didn’t make it off the ground. When it goes wrong, obscene amounts of money invested chasing after the next big thing is lost.

On the other hand, solopreneurs are generally level-headed types that go out on their own and make a calculated bet on themselves. And while there typically aren’t millions on the line, solopreneurs still take on their fair share of risk.

In most cases, a solopreneur will walk away from their day job to pursue their vision and use their savings as a war chest and safety net all at once. It’s a gamble many wouldn’t take, but for the solopreneur, the allure of freedom and personally meaningful work is too strong to resist.

The advantages of solopreneurship

As you can imagine, running a successful business alone has loads of advantages, best of all being that you get to keep all the hard-earned profit. But, besides the obvious financial benefits, here are all the other benefits solopreneurs enjoy from betting on themselves.

You are the boss

The best thing about being a solopreneur is that you get to be your boss. Not having to report to anyone means you decide what you work on, how you work on it, and when you do it.

For some, not having a boss to keep you accountable might torpedo productivity, but solopreneurs thrive on setting their agendas and seeing them through. 

Speed and Efficiency

Having a hierarchy of one means solopreneurs don’t have to run their decisions by anyone or wait to have them approved. This speed and efficiency are a large part of what makes a solopreneur successful.  

Being able to make a decision, learn from the outcomes, and iterate, allows solopreneurs to get more done quickly and efficiently, unlike teams that need to constantly check in with each other to stay on the same page.

Speed to market

One of the best advantages of being a solopreneur is that you don’t have to take forever trying to get to market.

As a solopreneur, if you have the skills you need, you can launch your business right away. But entrepreneurs, on the other hand, have to develop prototypes, pitch their ideas, secure funding, and clear a lot of hurdles before they go to market.

Even if you lack the skills, as a solopreneur, you can rapidly upskill yourself and start generating business for yourself long before a founding team has put together a convincing pitch.

Scaling is a luxury, not a priority

Solopreneurs aren’t beholden to investors and VC firms and don’t have to take unnecessary risks or push gimmicks to show growth.

As a solopreneur, starting a viable business that fits into and supports your lifestyle is the goal. Once that is met, you can shift your focus to creating systems that make the business sustainable and more enjoyable. 

Scaling for solopreneurs usually happens when there are obvious opportunities for growth to be exploited, and in such cases, that does not mean adding to the team. 

When solopreneurs speak of scaling, it is in terms of finding new strategies and leverage that allows them to generate higher profits from their business.

You build your vision

A big perk of going the solopreneurship route is waking up every morning to work toward your vision. Solopreneurs do not have to do anything they do not want or work on things misaligned with their beliefs and ambition.

 Solopreneurs decide where to invest their time and energy. And being able to work on their own terms on things they are passionate about is one of the reasons why solopreneurs are such lively people.

Solopreneurship has minimal requirements

Another advantage solopreneurs have over entrepreneurs is that, in most cases, all they need to run their business is a laptop and a stable internet connection.

Also, unlike projects that require VC investment, solopreneurship is not financially demanding. Most solopreneurs run simple, home-based businesses that operate on small tech stacks enabling them to get their tasks done very cheaply. 

The disadvantages of solopreneurship

Being a solopreneur has several disadvantages, the root cause of which is operating alone. 

As great as creative and decision-making freedom can be, solopreneurs have to deal with quite a bit of loneliness. They must rely solely on their judgment, talent, skill, network, experience, and funding to keep their business going. 

Essentially, solopreneurs are their own upper limit. They can only go as far as they can carry themselves. 

The limited access to resources and lack of a team to help bring the vision to life also means solopreneurs, generally, are not pursuing world-changing ideas.

But that does not mean you have to settle for tiny goals if you go the solopreneur route. Sara Blakely founded Spanx with $5,000 in savings, and she is now a billionaire. You can start a solopreneur, but that does not mean your vision can not evolve and expand beyond you.

Perhaps the most significant disadvantage of being a solopreneur is that you shoulder all the risk from your business alone. 

While the fallout of failure is never nearly as catastrophic as when VC-funded startups go belly up, a solopreneur’s business taking a turn for the worst can leave them with financial burdens that threaten their family, home, lifestyle, and even their health.

Why being a solopreneur is better than taking VC money

For many startup founders, securing venture capital funding feels like the golden breakthrough that will bring untold success, only it isn’t. The numbers suggest that 50% to 75% of VC-funded startups fail.

One such example of a failed VC-funded startup is Quibi. Founded in 2018, Quibi is a short-form streaming that raised a whopping $1.75 billion, only to be sold to Roku not long after its 2020 launch as a bust.

Quirky is another example of a VC-funded startup gone sideways. The startup got close to $170 million in capital funding, secured a strategic partnership with GE, and made it onto CNN’s Next List, but it sold for a meager $4.7million just six years after its founding in 2009.

Many other startups, including Homejoy, Yik Yak, Beepi, Arivale, Shyp, Anki, and Hollar, have flopped after securing hundreds of millions of dollars in VC money.

That is not to say VC money is cursed, but it certainly is not a guarantee of success. And, if Jawbone can get it wrong with $930 million worth of VC money, going a different route might not be such a bad idea.

Here are some reasons why being a solopreneur is better than taking VC funding

You retain 100% ownership

Taking VC money means giving up an ownership stake. And, the more money you take, the less your company is actually yours.

Being a solopreneur means you don’t have to compromise on what you want for the business to make it attractive to investors.

You don’t get screwed

Venture capital firms are not fairy godmothers that want to see you achieve your big dreams. Some are absolute sharks with no qualms about making off with your life’s work and leaving you holding the short end of the stick.

Being a solopreneur means you never cross paths with greedy types that would do anything for a profit.

You don’t need rigid compliance

VC money comes with the need to comply with all kinds of compliance standards to make investors feel safe trusting you with their money. 

Not needing VC money means you do not need to twist and contort your business to meet restrictive compliance requirements in hopes of getting some.

You don’t have distractions

Finding and courting investors can be a distracting and time-consuming endeavor, but as a solopreneur, you don’t have to deal with such.

As a solopreneur, all your actions are focused on keeping operations running smoothly, whereas entrepreneurs that rely on VC funding work with one eye on the upcoming funding round.

Running a one-person operation also allows you to keep your business as lean and nimble as you need it to be to meet your goals.

You stay hungry

Taking VC money sometimes has the unwanted effect of making entrepreneurs complacent and greedy to the detriment of their business. 

In the case of Jawbone, observers agree that raising such an enormous amount of money caused the company to rest on its laurels when its product was actually inferior to the competition.

And in another case of startups gone south, Beepi executives got greedy after the company raised $60 million in a Series B funding round. The executives started spending $ 7 million a month on their salaries to enrich themselves leading to the startup’s demise even though investors believed it had great potential.

Being a solopreneur means the only success you enjoy is the success you earn, and that will keep you hungry and honest in your work.

 

An example of a solopreneur

All it takes to be a solopreneur is going out on your own and starting a business. That’s all there is to it, but the hard part is sticking with it and making it work.

One example of a solopreneur that’s made it work is Justin Welsh. There are many solopreneurs out there, but we love Twitter, and none are as outspoken about the idea of solopreneurship as Justin. 

Justin Welsh - Solopreneur

Justin quit his high-paying job after burning out in 2019 and traded it for redesigning a new life in Nashville, Tennessee. His mission was to live life with more intention, and now he runs a boutique advisory firm for entrepreneurs and creates digital products.

On Twitter, Justin is The Diversified Solopreneur and he uses the platform to keep us in the loop about his ambitious plan to generate $5 million in revenue from a portfolio of one-person businesses.

If you follow Justin on Twitter, you can look forward to exceptionally detailed tweets and threads sharing how his mission is going and tips on growing your audience and business. 

You can also keep up with Justin by subscribing to his newsletter, 

The Saturday Solopreneur, where he shares one value-packed with 42 000 other solopreneurs.

Becoming a solopreneur

If you think this solopreneur stuff was made for you, there are tons of ideas you can start working on right away. Check out the list below and get inspired for your solopreneurship adventure:

  • Graphic Designing
  • Web Development
  • Software Development
  • Online Tutoring
  • Digital Content Creation
  • Social Media Management Service
  • Social Media Ads Service
  • Virtual Assistant
  • Freelance Writing
  • Digital Marketing
  • Affiliate Marketing
  • E-Commerce Seller
  • Errand Service
  • Event Planning
  • Cleaning Service
  • Mindset/Life Coaching
  • Personal Trainer
  • Personal Stylist
  • Pet Grooming Service
  • Photography Service

We love helping solopreneurs at Hypefury — let us know on Twitter if you have taken the ‘solopreneur’ route over the ‘VC’ route — we’d love to hear from you!

And Hypefury’s Twitter Daily program is exactly what solopreneurs need to get SERIOUS about supercharging follower growth. Easy tips. Daily.

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