Tempting Fate
How far would you go to finance your startup?
Deva Hazarika, CEO at ClearContext Corp., a software company in San
Francisco, once paid his business's bills with winnings from
online poker. "Poker helped us bridge the gap between
development and when we started generating sales," Hazarika
says. He and his partner, Brad Meador, estimate their 10 hours each
of poker time every week delivered a 10 percent return.
"Entrepreneurs do what it takes to be successful,"
says Joseph C. Picken, executive director of The Institute for
Innovation and Entrepreneurship at the University of Texas, Dallas.
"But [playing online poker] is not a serious way to raise
funds."
Nevertheless, extreme financing has long been an option for
early stage businesses with no access to loans, credit or
investors. But even established businesses may be pushed to the
financing edge. "It's more common now," says Jan
Norman, a small-business expert in Diamond Bar, California. In her
book What No One Ever Tells You About Financing Your
Own Business, Norman offers some extreme examples: Jim
McCafferty, founder of JMP Creative, a marketing firm in Santa Ana,
California, once met payroll by entertaining as an escape artist;
and Jane Bayer boosts income at Factfinders, her
Lake Forest, California, information research company, by buying
and selling reference books.
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In most cases, Norman says, the entrepreneur is using existing
skills or experience to raise money. McCafferty, for example,
started doing magic as a child, while Bayer works with reference
materials every day for her research clients.
To Picken, extreme financing is a short-term answer that diverts
attention from other ways to raise money: "Hard work and
demonstrating that you've got a viable product with real
customers and a sustainable competitive advantage are key to
obtaining [conventional] financing."