Fundraising vs. Bootstrapping?
Joseph Lee
6 replies
Curious to see how many folks here have raised capital for their idea/startup vs. choosing to bootstrap.
Why did you decide to pursue one over the other
Replies
Stefan Pettersson@stpe
As founder I’ve done one bootstrapped, done one VC-funded. Now solo-bootstrapping.
First bootstrapped was within B2B marketing tech - our bet was to take no salary for half a year and take that time to try to close a deal as well as doing the product as fast/scrappy/manual as possible.
Second was more of "let's bet big and take the market"-strategy, hence VC funded.
Now doing solo-indie-hacking. And if I would make something that becomes big, I would only raise capital after product market fit (also - I'm only doing projects where I know I can reach product market fit solo).
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@stpe thanks for the context! I've also done both.
Bootstrapping is fun and whimsical but I find that it's hard to sustain unless you're already financially well off through work, exit, inheritance, etc.
I find that building a business is hard enough as it is, without the distractions of the founder having to think about what they're eating, buying, spending etc etc.
The diffusion of focus when bootstrapping from a non-financially sound position can be a bottleneck and inhibitor to thinking bigger.
@supademo_joe Yes, for sure. Bootstrapping I think does only make sense if you can
- set a cut-off date
- have savings to finance yourself until then (with some margin, to not have to worry)
- have a fall back plan if so
- you know how to execute on your idea
- your idea doesn’t require a larger upfront investment
- you can go to market during this period
Would not say you need exit-money to bootstrap. Also doesn’t have to be whimsical. But not all ideas are for bootstrapping.
Biggest challenge when scaling a bootstrapped business is cashflow. On the other hand you can only scale when your business is working, and with less finacial buffer.
With early-stage VC-funded it is the other way. A bigger bet and scaling before you got something sustainable. So as founder you will quickly spend most of your time on growing the organisation instead.
Tried both as well.
First of all, both should go for profitability. Boostrapping gives more freedom esp if your life has lots going on. VC-funded gives you more power to use money to buy time.
Ultimately, it's still products that can hit PMF wins.
@harrischh agreed on both. Even when scaling up via VC, I've always pushed to ride the profitability curve as much as possible.
I find that bootstrapping gives has more mental freedom/less pressure but it can also be a huge distraction if you don't come from a financially sound position to begin with