Why this tech CEO turned down funding from more than 100 investors

“Most people in tech who are VC-backed spend more money than they make, and it just adds on to the complexity of the business, which doesn’t interest us,” he adds.

According to Harvard Business School senior lecturer Shikhar Ghosh, as many as 75 percent of venture-backed companies fail to return cash to investors. Bill Gates refers to the success rate of VCs as “pathetic.”

Fried says he’s unable to confirm just how much money Basecamp has turned down because “they’ve never gone down the path to have the conversations with VCs.”

Though tech industry culture often promotes accelerator programs and pitch competitions that fail to clearly communicate the pros and cons of funding, Fried hopes young entrepreneurs can look at his business and realize VC backing isn’t their only option for growth.

“Young kids get in these [accelerators] because they are looking for help, which is cool,” he says. “But these accelerators are all about fundraising, and they have demo days and this whole track of raising money becomes a part of their business — and it just doesn’t have to be.”

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