Quora Answer: Should I Ask My Clients to Invest in My Startup?

The following is my answer to a Quora question: “Should I ask my clients to invest in my startup?” 

It is not ideal to cannibalise your client base to fund your startup.  If they are both the funder and source of revenue, would it be in their interest for you to have a healthy margin for your goods and services?  It would make more sense for them to keep margins low to help their bottomline, and when you eventually fail, they will buy you up cheaply, and secure their position further up the supply chain. 

Your clients are your clients.  They are your source of revenue.  They want to keep costs of suppliers down, not enrich them.  Funders should be people who have money but are not interested parties with goals fundamentally contrary to yours.  It should be the sole interest of funders that you succeed so that they get a healthy return on their investment upon exit.