To raise VC money or to bootstrap, that is the question
Idea of a Tech Startup
When you say "tech startup" to someone, they often think of companies that raised venture funding, but I don't think that is a gate that needs to exist.
There are companies that have 10 people, tons of customers and profits, and never raised venture capital. There are indie hackers that run 3 different tech products as solo entrepreneurs. There are companies that are planning to raise money or trying to raise that have an MVP and paying customers. Why can't they all be tech startups?
I tell people I have a tech startup because I do. I'm trying to change the way we approach productivity.
I have an MVP in private beta. I have customers. I have community.
I code, I help people, I build communities, I write blog posts, I do bookkeeping, I perform market research, I do customer service. I am running a technology company.
Whether I raise or not, I'm going to keep building Goblin and trying to help people.
I know that not every company can bootstrap. I'm a coder so I'm doing the heavy lifting when it comes to software. I also enjoy writing and interacting with people on twitter so I do my own marketing. I used to be a corporate paralegal and brewery owner, so I have lots of skills that I would otherwise have to hire out. If you can't bootstrap, that's okay!
Benefits of Bootstrapping
- I own 100% of my Delaware corporation right now. I'm in control of the board of directors and I can pretty much do whatever I want without updating anyone or answering to anyone. No one can fire me or force a sale of the company.
- There's no pressure to grow at a certain rate.
- I can pay myself whatever I want. If my company became profitable, I could pay myself more instead of reinvesting it all into the company (again, because I would be focused on growth).
- I can actually code. Typically with startups that raise money, the CTO will code most of the initial app, but as they hire the CTO will have to let go of coding responsibilities over time.
- I don't have any employees. That's a ton of compliance and ops headaches that I don't have right now.
- Less stress and more work/life balance.
Benefits of Raising Money
- I would be able to pay myself a regular coder salary and get benefits.
- I would get advice, intros, and a ton of other benefits from my investors.
- I may be able to find product-market fit faster because I could hire more devs.
- I could show people that you can be people-first and still run a profitable company.
- I could hire a team and collaborate with them.
Bottom Line: It's personal
The answer to the question "raise or bootstrap?" is "it's personal". Even for each company, it's not right or wrong to raise money. I might decide to raise and then not be able to (women only get 2% of VC funding after all). I might bootstrap for a year and then raise a round.
I think the question isn't really "should I raise or should I bootstrap?". The more important questions that you should ask yourself as a founder are:
- What do you want your life to be like every day? Bootstrapping can offer a lot more work/life balance since you're in control. If you've never managed anyone or operated a company, raising money and hiring a team can be a huge adjustment.
- What are your priorities? If you have young kids and want to prioritize your family, maybe you should bootstrap. If you want to make as much money as possible while you're young, maybe you should raise.
Whatever I decide, it's okay! I'll learn a ton and have fun either way.