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I've started a few modestly successful companies over the past decade. Most of them were bootstrapped, but for one of them I went the VC route. I raised $16M ov

I've started a few modestly successful companies over the past decade. Most of them were bootstrapped, but for one of them I went the VC route. I raised $16M over 4 years, starting with Angel, then VC, then "top-tier" VC. Taking VC funding made the experience of owning and operating a business worse in almost every way. There are many reasons why I wouldn't recommend raising VC money, but I'll focus on just two right now. First, once you take VC funding, it's no longer your company. Think about that - this business that you created from nothing, sacrificed so much for, know inside and out, and poured years of your life into - now you share control with someone who you've spent maybe 8 hours with. And you're going to have to do that again and again over the years. The second reason is the disparity in the invested interest between the VCs and you. You have EVERYTHING riding on this startup. The VC has almost nothing riding on your company. It's not their money, they get a great salary either way, and they are expected to have most of their investments fail. There seemed to be more worldly prestige running a VC backed company, but that's probably because we bought press coverage. :-) In terms of my own personal happiness, I've never been happier than when I was running my own bootstrapped company...and I also made a ton of money.

nobody271 8y ago
How do you know what type of company to start and how much of your own money did you invest when bootstrapping a company. I heard about startups that do something like make medical insurance billing easier. That raises a lot of questions, actually. * How does one even learn that is an issue? * It seems like something where getting started is driven entirely by having contacts in the industry. * There has to be a ton of prohibitively expensive red tape to cut through. Would you just pay a lawyer to figure all that out? Lawyers are expensive! * It doesn't seem like something that really makes the world better although I'm sure you could tell yourself that it does if it was your business. Is having your business do something you consider positive important? * Where do you get the knowledge you need to get started in an industry. Say you're really only good at programming and want to start a ...fashion business. How do you even start? It can be hard to use Google when valuable information is buried under an ocean of click bait articles.
- lotsofpulp 8y ago
  >I heard about startups that do something like make medical insurance billing easier. That raises a lot of questions, actually. * How does one even learn that is an issue? Try figuring out how much a medical procedure or visit or lab will cost before you have it done, and you will find out very quickly.
- uberswe 8y ago
  > How do you know what type of company to start and how much of your own money did you invest when bootstrapping a company. I get random ideas all the time and usually deciding to do a project will lead to something. I started with an idea where I wanted to do web analytics initially. Turns out that people liked my app more for the cool graphs that could be easily exported into slideshows and pdfs. The idea changed a lot from talking to people and I found something I never thought people would pay for.
- beat 8y ago
  Become a technical co-founder for someone with a deep knowledge of some valuable business, who has a great idea for a startup but lacks the technical skill to make it work. There are lots of them.
  - alexhutcheson 8y ago
    Be careful: signal/noise ratio is extremely low here. There are lots of people, particularly in SV, with vague ideas and a general desire to be a "non-technical cofounder", but far less that have the deep, valuable domain knowledge being discussed here.
    - beat 8y ago
      Well, yeah. Vet your partners. They need to have a realistic and achievable idea that makes sense to you. "Business plan" becomes their responsibility, and it needs to be better than "collect underpants, ???, profit!", or "Facebook for cats" or whatever.
- rsweeney21 8y ago
rcdwealth 8y ago
If you are not well versed in company structures, than maybe you really loose control. But that depends of you. In a LLC/LIMITED company you as shareholder/member of the company, decide of your structure. So if you do decide that you give up some shares/interest to the investors, then that can be the reason why you would loose the control. But even if you give up all the shares, by means of controlling the initial articles of organization and operating agreement, you can still remain in full control as manager/director of the company. In case of Limited Partnerships that issue is even better regulated from beginning, as Limited Partnership consists of one or more General Partners who are managers of the business and one or more Limited Partners who are usually investors, but cannot manage the business and often cannot even replace the General Partners. The issue is simple. What you decide is what you get in the end.
- bkanber 8y ago
  VCs typically do not invest in LLCs and will force you to form a C Corp as part of the raise.
- rsweeney21 8y ago
  - VCs won't invest in LLCs or LLPs. They invest in C-Corps. The possible arrangements you described don't apply to VC backed companies. - You only get to set the terms when you don't need their money. This won't apply to you unless you've bootstrapped to significant revenue or you already have a previous successful exit under your belt.

nobody271 8y ago

How do you know what type of company to start and how much of your own money did you invest when bootstrapping a company. I heard about startups that do something like make medical insurance billing easier. That raises a lot of questions, actually. * How does one even learn that is an issue? * It seems like something where getting started is driven entirely by having contacts in the industry. * There has to be a ton of prohibitively expensive red tape to cut through. Would you just pay a lawyer to figure all that out? Lawyers are expensive! * It doesn't seem like something that really makes the world better although I'm sure you could tell yourself that it does if it was your business. Is having your business do something you consider positive important? * Where do you get the knowledge you need to get started in an industry. Say you're really only good at programming and want to start a ...fashion business. How do you even start? It can be hard to use Google when valuable information is buried under an ocean of click bait articles.

lotsofpulp 8y ago
>I heard about startups that do something like make medical insurance billing easier. That raises a lot of questions, actually. * How does one even learn that is an issue? Try figuring out how much a medical procedure or visit or lab will cost before you have it done, and you will find out very quickly.
uberswe 8y ago
> How do you know what type of company to start and how much of your own money did you invest when bootstrapping a company. I get random ideas all the time and usually deciding to do a project will lead to something. I started with an idea where I wanted to do web analytics initially. Turns out that people liked my app more for the cool graphs that could be easily exported into slideshows and pdfs. The idea changed a lot from talking to people and I found something I never thought people would pay for.
beat 8y ago
Become a technical co-founder for someone with a deep knowledge of some valuable business, who has a great idea for a startup but lacks the technical skill to make it work. There are lots of them.
- alexhutcheson 8y ago
  Be careful: signal/noise ratio is extremely low here. There are lots of people, particularly in SV, with vague ideas and a general desire to be a "non-technical cofounder", but far less that have the deep, valuable domain knowledge being discussed here.
  - beat 8y ago
    Well, yeah. Vet your partners. They need to have a realistic and achievable idea that makes sense to you. "Business plan" becomes their responsibility, and it needs to be better than "collect underpants, ???, profit!", or "Facebook for cats" or whatever.
rsweeney21 8y ago

rcdwealth 8y ago

If you are not well versed in company structures, than maybe you really loose control. But that depends of you. In a LLC/LIMITED company you as shareholder/member of the company, decide of your structure. So if you do decide that you give up some shares/interest to the investors, then that can be the reason why you would loose the control. But even if you give up all the shares, by means of controlling the initial articles of organization and operating agreement, you can still remain in full control as manager/director of the company. In case of Limited Partnerships that issue is even better regulated from beginning, as Limited Partnership consists of one or more General Partners who are managers of the business and one or more Limited Partners who are usually investors, but cannot manage the business and often cannot even replace the General Partners. The issue is simple. What you decide is what you get in the end.

bkanber 8y ago
VCs typically do not invest in LLCs and will force you to form a C Corp as part of the raise.
rsweeney21 8y ago
- VCs won't invest in LLCs or LLPs. They invest in C-Corps. The possible arrangements you described don't apply to VC backed companies. - You only get to set the terms when you don't need their money. This won't apply to you unless you've bootstrapped to significant revenue or you already have a previous successful exit under your belt.