4 ms·

It's always surprising to me how many people in tech need to seek investment. Saving some scratch over a few years of paid employment, then bootstrapping, seem

by human20190310 7y ago

It's always surprising to me how many people in tech need to seek investment. Saving some scratch over a few years of paid employment, then bootstrapping, seems like a seldom-traveled route.

mistrial9 7y ago
you are failing to see half of the equation -- capital supplied companies can make moves that are not an option for boot-strap, and those moves are used aggressively in many cases. Secondly, capital is abundant in the West (perhaps too abundant) .. those seeking return on that capital are making the paths that lead to this system.
chrisseaton 7y ago
> Saving some scratch over a few years of paid employment, then bootstrapping, seems like a seldom-traveled route. Probably because most people don't in their wildest dreams have the kind of spare cash left at the end of the month to do something like this.
- human20190310 7y ago
  Indeed; I should have been more specific in referring to people already working in the Bay Area technology scene, where salaries are quite high.
  - dave5104 7y ago
    And cost of living in the Bay Area is quite high to go along with it. Unless you're single with no kids, it's probably not very feasible for most people.
    - bluGill 7y ago
      Very few people with kids to support should try this no matter where they live. When it just you (a supportive spouse with a day job can be helpful, but supportive is key) the worst case can get pretty bad: you can sleep under your desk in the cheapest roach apartment in town, eating beans for dinner - living on less than 1000/month for everything (you are taking a risk that you won't need the insurance you are skipping). This allows you to live for a long time on very little cash flow. Your bankers will wonder how you can run a business with so little money in the bank but you will always be on time for your minimal bills. It won't matter that you can't afford activities, because other than your daily 30 minute exercise in the local park you won't have time for any activities (even this is optional, but for your health I recommend it). Hopefully the business takes off after a couple years and you can settle down to a more normal schedule. Once you have kids to support it gets harder. Not only are there more bills to pay, spending so much time on business means you miss many once in a lifetime opportunities to see the kids as they grow.
      - rsync 7y ago
        "Once you have kids to support it gets harder. Not only are there more bills to pay, spending so much time on business means you miss many once in a lifetime opportunities to see the kids as they grow." The Torah confirms: "... a man should build a house, plant a vineyard and then marry a wife” (Sotah 44a).
- deleted 7y ago
  [deleted]
yepthatsreality 7y ago
You’re not going to see a post from a seed accelerator on said seed accelerator’s hosted forum about self-bootstrapping without investors hands in the mix though. You’ll get all sorts of responses leading the other way: “no one has money to bootstrap a business!” Or “An investor has special capital and asset powers you need it” Which is nothing but FUD.
- deleted 7y ago
  [deleted]
teej 7y ago
Using other people’s capital has better EV and a better worse case outcome than completely self-funding. Not that every company needs to be venture backed.
gwbas1c 7y ago
I tried that once, and it works for a certain kind of business and a certain kind of developer. Basically, it works if you're building the kind of thing that you can build, and take to market, in 50% of your time with minimal or no assistance. The other 50% of your time will be on business development tasks. Such an approach works when you're a great software developer, and a great businessperson, and disciplined enough to know what you can do as a single person with a small budget. These are things like small websites, small apps, little doodads that can be manufactured via contracting with someone else and sold on Amazon, ect, ect. There are plenty of interesting businesses that can be built that way, and plenty of interesting businesses that can't be built that way. (Just try to build something that needs hard capital for tools, like a chip fab!)
Cpoll 7y ago
Anecdotally, I've seen (2) companies fail because they refused investment money. The usual avenues of failure are: - You have a few major clients monopolizing your time, and you can't afford additional resources to break out of the pattern. - You prove the viability of the product and create a market, but a venture-backed/larger competitor eats your dinner. I'm not saying it's always correct to accept funding, but it's pragmatic to consider it.
andrei_says_ 7y ago
Also in the US for profit healthcare costs are prohibitive unless employer supported.
TrackerFF 7y ago
There are a couple of reasons A) They have some ideas they want to launch NOW; not 3-5 year down the road. B) Saving money won't make a dent in what's needed C) They don't have access to rich family or friends. In my local startup scene I've noticed a lot of founders coming from well-paying backgrounds. Ex-Finance, consulting, and such - usually they have pooled money with co-founders from similar industries. Often times in combination with loans or similar from family or friends. Or even more often than that, you have already successful founders that are spending money from previous sales / exits. In either case, those tend to be the people with hundreds of thousands to spend. For regular folks with normal salaries, it's cold-calling every investor under the sun.

It's always surprising to me how many people in tech need to seek investment. Saving some scratch over a few years of paid employment, then bootstrapping, seems like a seldom-traveled route.

mistrial9 7y ago

you are failing to see half of the equation -- capital supplied companies can make moves that are not an option for boot-strap, and those moves are used aggressively in many cases. Secondly, capital is abundant in the West (perhaps too abundant) .. those seeking return on that capital are making the paths that lead to this system.

chrisseaton 7y ago

> Saving some scratch over a few years of paid employment, then bootstrapping, seems like a seldom-traveled route. Probably because most people don't in their wildest dreams have the kind of spare cash left at the end of the month to do something like this.

human20190310 7y ago
Indeed; I should have been more specific in referring to people already working in the Bay Area technology scene, where salaries are quite high.
- dave5104 7y ago
  And cost of living in the Bay Area is quite high to go along with it. Unless you're single with no kids, it's probably not very feasible for most people.
  - bluGill 7y ago
    Very few people with kids to support should try this no matter where they live. When it just you (a supportive spouse with a day job can be helpful, but supportive is key) the worst case can get pretty bad: you can sleep under your desk in the cheapest roach apartment in town, eating beans for dinner - living on less than 1000/month for everything (you are taking a risk that you won't need the insurance you are skipping). This allows you to live for a long time on very little cash flow. Your bankers will wonder how you can run a business with so little money in the bank but you will always be on time for your minimal bills. It won't matter that you can't afford activities, because other than your daily 30 minute exercise in the local park you won't have time for any activities (even this is optional, but for your health I recommend it). Hopefully the business takes off after a couple years and you can settle down to a more normal schedule. Once you have kids to support it gets harder. Not only are there more bills to pay, spending so much time on business means you miss many once in a lifetime opportunities to see the kids as they grow.
    - rsync 7y ago
      "Once you have kids to support it gets harder. Not only are there more bills to pay, spending so much time on business means you miss many once in a lifetime opportunities to see the kids as they grow." The Torah confirms: "... a man should build a house, plant a vineyard and then marry a wife” (Sotah 44a).
deleted 7y ago
[deleted]

yepthatsreality 7y ago

You’re not going to see a post from a seed accelerator on said seed accelerator’s hosted forum about self-bootstrapping without investors hands in the mix though. You’ll get all sorts of responses leading the other way: “no one has money to bootstrap a business!” Or “An investor has special capital and asset powers you need it” Which is nothing but FUD.

deleted 7y ago
[deleted]

teej 7y ago

Using other people’s capital has better EV and a better worse case outcome than completely self-funding. Not that every company needs to be venture backed.

gwbas1c 7y ago

I tried that once, and it works for a certain kind of business and a certain kind of developer. Basically, it works if you're building the kind of thing that you can build, and take to market, in 50% of your time with minimal or no assistance. The other 50% of your time will be on business development tasks. Such an approach works when you're a great software developer, and a great businessperson, and disciplined enough to know what you can do as a single person with a small budget. These are things like small websites, small apps, little doodads that can be manufactured via contracting with someone else and sold on Amazon, ect, ect. There are plenty of interesting businesses that can be built that way, and plenty of interesting businesses that can't be built that way. (Just try to build something that needs hard capital for tools, like a chip fab!)

Cpoll 7y ago

Anecdotally, I've seen (2) companies fail because they refused investment money. The usual avenues of failure are: - You have a few major clients monopolizing your time, and you can't afford additional resources to break out of the pattern. - You prove the viability of the product and create a market, but a venture-backed/larger competitor eats your dinner. I'm not saying it's always correct to accept funding, but it's pragmatic to consider it.

andrei_says_ 7y ago

Also in the US for profit healthcare costs are prohibitive unless employer supported.

TrackerFF 7y ago

There are a couple of reasons A) They have some ideas they want to launch NOW; not 3-5 year down the road. B) Saving money won't make a dent in what's needed C) They don't have access to rich family or friends. In my local startup scene I've noticed a lot of founders coming from well-paying backgrounds. Ex-Finance, consulting, and such - usually they have pooled money with co-founders from similar industries. Often times in combination with loans or similar from family or friends. Or even more often than that, you have already successful founders that are spending money from previous sales / exits. In either case, those tend to be the people with hundreds of thousands to spend. For regular folks with normal salaries, it's cold-calling every investor under the sun.