Billionaire entrepreneur Mark Cuban, renowned for his role as an investor on the hit TV show Shark Tank, offers a surprising piece of advice: if you aim to make substantial profits, avoid raising capital for your business.
Instead, Cuban recommends starting your venture “with as little money as possible,” a point he emphasized during the 2023 SXSW Conference, according to CNBC.
Cuban’s Perspective:
Despite his experience investing in startups, Cuban advises entrepreneurs to steer clear of taking on investors if they want to maximize their earnings.
The more ownership and control you maintain, the higher your potential for profit,” he stated. Cuban noted that raising capital often comes with strings attached, as investors expect returns. He suggests entrepreneurs rely on their personal savings and stretch those resources as far as possible.
Cuban also highlighted how some entrepreneurs sell billion-dollar companies but walk away with far less profit than expected. “They own just 2% of the company in the end,” he said, emphasizing the value of equity ownership.
Drawing from his own journey, Cuban shared that after college, he founded MicroSolutions, a software consulting business, which he sold for $6 million at age 32, earning a $2 million profit. Later, he acquired a small audio network startup, transformed it into Broadcast.com, and sold it to Yahoo! for $5.7 billion.
“If you see people with a ‘B’ next to their name, it’s because they own the majority of equity in their company,” Cuban said, underlining the power of retaining ownership.
