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Co-founder here, I was waiting for this comment to be honest. So in essence, if you consider that bootstrapping is building a business without external funding

by daolf 5y ago

Co-founder here, I was waiting for this comment to be honest. So in essence, if you consider that bootstrapping is building a business without external funding, you're correct. But to me, bootstrapping VS "VC road" is much more nuanced than this. Going the VC road forces you to have crazy growth and raise more round because the VC model only works if they fund unicorn 1 time out of 100(0). TinySeed works even if they fund 8/7 figures businesses, and this was our goal. We had no money when we began (we went through most of our savings during our first venture), no family to raise an angel round and this solution was perfect for us. The amount of money we got was nothing near what we could have had raising traditional money, but it allowed us to stay independent and grow at our own pace.

czbond 5y ago
@Daolf - congrats on the building, definitely NOT easy to do. What growth metrics did Tiny look at? Did the investment come at a time when the business was needing to "survive, sustain, or grow"? [every business has all of those phases]
- daolf 5y ago
  Thanks a lot. > What growth metrics did Tiny look at? I assume you mean during the application process. So they asked just the basic stuff, MRR, growth, churn. We were at $1k5 MRR when we applied and $3k when we got it. I think what worked for us during the process was that Kevin had been running a small Java web scraping blog + book at that time. > Did the investment come at a time when the business was needing to "survive, sustain, or grow"? We were slowly switching from survival to sustain mode. They allowed to make the transition and go full grow mode.
  - robocat 5y ago
    > They allowed to make the transition and go full grow mode. The point of bootstrapping is making the compromise where you trade a lower growth rate for the benefit of retaining 100% ownership of your business. Your statement is a VC funding model, even if the money is called seed and you are not trying to become a unicorn. Your giving away equity for money is simply not bootstrapping. Calling your business bootstrapped is lying in my opinion. What I think doesn’t matter, but being deceitful is silently judged by others where their opinions do matter to you, and the consequences of that are usually invisible.
jgmmo 5y ago
bootstrap = on your own. That's it. You had some seed funding.
- artembugara 5y ago
  Founder of another TonySeed startup. On your own can mean many things. I also burnt through my personal savings for the first year. So. On your own is just “VC’ed yourself” Taking money from TinySeed is very different than taking money from VC.
  - capableweb 5y ago
    > So. On your own is just “VC’ed yourself” Precisely. If TinySeed has provided funds, it's no longer "VC'ed yourself", it's "VC'ed yourself + tiny seed from TinySeed". > Taking money from TinySeed is very different than taking money from VC. No one is arguing that TinySeed is just like any other VC. But instead that by accepting VC, you could no longer claim the business to be bootstrapped.
    - BBC-vs-neolibs 5y ago
      So if I start with $1M of my own money, is it bootstrapped? If family (with fuzzy conditions) ponied up $250k, is it bootstrapped?
      - Bjartr 5y ago
        $1M of your money? Yes $250k from immediate family, if said fuzzy conditions don't confer any ownership or repayment? I'd say just barely yes (it's basically a gift to you at that point, which is then your money) $250k from a third cousin in return for equity? No. Being bootstrapped isn't an ungameable category, but it is a fairly unambiguous one IMO.
        deleted 5y ago
        [deleted]
  - 5y ago
djbusby 5y ago
Hmm, but TinySeed now as a position in your captable. They are outside money. I think bootstrap means 100% your own money and customer money (revenue)
hooande 5y ago
Not sure why you needed the TinySeed money. It looks like you were only a few months away from $10k/mo, which seems near the boundary for sustainable income. Was there some investment you were able to make with the TinySeed money that pushed you over the line? Maybe I missed this in your post, but did you utilize search advertising? That seems to be the most common and effective tool for short term growth
- daolf 5y ago
  So to be honest, we ran the math and never actually spent TinySeed money. We could have mathematically made without it. But three things to consider here: - TS money multiplied our runway by 10 and really reduced the amount stress we've experienced. Especially with COVID, during which we experienced our first negative growth month - We were able to finally pay ourselves above minimum wage (1,500$) - The mentoring and advices which came out of the program, really made the whole difference. Where we live, the startup ecosystem is basically 0, we don't know a lot of startup funders or experienced entrepreneur. It changes everything when you can ask a precise question about business and get a response from an expert in the next 6 hours. We had call with mentors and other member of the community, basically a one hour free consulting with an expert, about SEO, copywriting, recruiting, sales, growth, and marketing and THIS does move the needle a lot.
capableweb 5y ago
I understand that TinySeed is different than the typical doing VC roadshows and having crazy growth, that wasn't my point. I also understand that the amount you received from TinySeed wasn't probably too crazy, it's in their name after all; tiny seed. But that name also contains what they do, they provide seed funding. Instead of contrasting Bootstrap VS Crazy-VC-Mode, it's more suitable to compare two different things. One is if you're bootstrapped or not, and if you're not, are you doing Tiny-VC-Mode or Crazy-VC-Mode? In this case you chose not to be bootstrapped, and are doing the Tiny-VC-Mode. It's great that going Tiny-VC-Mode allowed you to grow at your speed and still remain independent, much better than the Crazy-VC-Mode usually allows. But if we start calling that "bootstrapped", then where does the line go for what is bootstrapping a business or not. The meaning would have to change from "Without any outside money" to "With a little bit of outside money, but still independent" which says something else. Edit: Another way to see it: You still bootstrapped the early stages of the company, up until the point where you accepted outside investments. So according to you post, you joined TinySeed in May 2020, which your graph under "Slowly reaching $10k MRR" (https://d33wubrfki0l68.cloudfront.net/e1ea487c1823d29fb55da41f739e4e0d93051071/3febc/images/about-us/10kmrr.png https://d33wubrfki0l68.cloudfront.net/e1ea487c1823d29fb55da4...) show to be right around $5K MRR. So what you bootstrapped was up until "$60000 ARR", but after that you were no longer bootstrapped as TinySeed provided capital to you.
mbesto 5y ago
Nice little meta discussion we have here... Once again another thread where no one seems to agree on what constitutes venture capital and what a startup is. By definition - you took a minority investment. Bootstrapping, colloquially, means you have not funded your company with any equity or capital that could be converted to equity. btw - you got attention by saying you were bootstrapped and since this is just marketing material then kudos to you for the good marketing.
mattlutze 5y ago
The common use for "bootstrapping" is using personal capital and then funding the business with its own proceeds. If you'd say "How we grew our business without traditional VCs" that'd be an excellent title. What you describe in your comment here sounds like an interesting alternative approach. But the way it's introduced looks like an article about how a 25 year old bought their own house, and step 5 is "my parents took the mortgage and I pay them rent."
jasode 5y ago
>But to me, bootstrapping VS "VC road" is much more nuanced than this. I went to the "TinySeed.com" website landing page and I do see that they prominently advertise "The First Accelerator Designed for SaaS Bootstrappers". And then their FAQ page has these example financial terms: >TinySeed invests $120k for the first founder, $60k for the second, and $40k for the third. Our standard terms are for 10-12% equity. -- from https://tinyseed.com/program#program-faq https://tinyseed.com/program#program-faq Well, if founders accept those terms, they are no longer "bootstrapping" as people generally understand that word. Yes, you may have been bootstrapping right up to the point _before_ taking TinySeed $180k but after that outside capital infusion, "bootstrapping" literally no longer applies. It doesn't seem like any nuance is necessary. It's quite a binary status.
- jt2190 5y ago
  I guess we can debate the existence of the “True Bootstrapper”, but that’s not a very interesting conversation. The term “bootstrapping” predates the existence of funding sources like TinySeed, and is now outdated. It was never terribly precise anyway, e.g. if someone saves up an “initial investment” amount of money before starting, are they bootstrapping? What about having a spouse who pays the bills while starting? The digital age has also introduced a whole new range of funding options that didn’t exist very long ago, crowdfunding for example.
  - jasode 5y ago
    >I guess we can debate the existence of the “True Bootstrapper”, but that’s not a very interesting conversation. I'm a language descriptivist not prescriptivist so I don't care to debate it but just pointing out that the founders are using "bootstrapped" in a confusing way that contradicts how others understand it. (Which then causes meta discussion of founders trying to educate readers on the nuances of what "bootstrap" means.) Compare the financial equity cap table terms to YC. When YC terms were $120k for 7% equity, people (generally) didn't call all those annual YC batch applicants "bootstrap companies". E.g. we (generally) did not say "DropBox is a bootstrapped company", "AirBNB is a bootstrapped company". But TinySeed funding means it's a bootstrapped company?!? Doesn't that seem inconsistent? Taking outside funding from professional investors for equity stakes typically wasn't seen as bootstrapping. My point is that it's a whole heck of a lot easier if you shed the "bootstrap" label when the financial status changes. It's not a flaw or being evil to lose that label. Why is it so psychologically necessary to keep it?
btown 5y ago
To me, it's really important that the tech community define "bootstrapping" as no more and no less than "having a plan to reach profitability with total investment on the order of what a [not-outrageously-wealthy] group of founders might invest," and to frame it as a good thing. With TinySeed's round at "$120k for the first founder, $60k for the second, and $40k for the third" (https://tinyseed.com/program#program-faq https://tinyseed.com/program#program-faq) this is very much along those lines. If one further gatekeeps the label with "but the founders need to invest this personally or it doesn't count..." that restricts the label to a very small segment of privileged individuals. And in a world where there's a (false) narrative of a "bootstrapped or VC backed" binary, that gatekeeping reinforces the notion that less privileged founders have no choice but to go the VC route or do nothing at all. I would hazard a guess that great ideas and great societal impacts have been lost as a result of this framing.
- mbesto 5y ago
  > it's really important that the tech community define "bootstrapping" More importantly we should probably define what a "startup" is. No one seems to agree on a definition there.
- daolf 5y ago
  That is very elegantly said. 100% agree with you.
- jasode 5y ago
  >, it's really important that the tech community define "bootstrapping" as [...] With TinySeed's round at "$120k for the first founder, $60k for the second, and $40k for the third" (https://tinyseed.com/program#program-faq https://tinyseed.com/program#program-faq) this is very much along those lines. But when YC invested $120k for 7% equity, we typically didn't call all those startups like Dropbox/AirBNB etc "bootstrapped companies". And $180k for 2 founders is more than YC's previous terms. >If one further gatekeeps the label with It's unfair to call it "gatekeeping" rather than a case of confusing many readers with a headline that flips the meaning of "bootstrapping".
  - 5y ago
PragmaticPulp 5y ago
I appreciate the honesty and the article, but it would have been just as interesting (and more authentic) if you would simply be honest: “How we got to $1mm ARR with only a tiny seed round”. Reading an article and immediately recognizing inconsistencies is an instant turn-off for me, and I assume many other readers. I don’t see what you think you’re gaining by being misleading with the headline.
rglover 5y ago
Bootstrapping means you funded the entire thing out of pocket without any outside investment. There's nothing bad/wrong about how you did it, but it's not bootstrapping. Saying it is makes it confusing for newbies which means they're more likely to be taken advantage of by VCs that realize they can market themselves as a "bootstrapper fund."
- kohanz 5y ago
  Thinking about it in such binary terms is quite limiting and unhelpful though. It's a spectrum. I would consider ScrapingBee closer to a bootstrapped company than a venture-funded company. Heck, by your definition if I took $5k of friends & family money to start a business that grew to $5M ARR,I could not call that "bootstrapped". This is why Rob Walling (co-founder of TinySeed) likes to use the term "fundstrapped". There are a lot more funding options out there that do not come with the narrow pathway associated with typical venture funding.
  - cjbgkagh 5y ago
    It seems there are some definitions that allow for some external funding. I’m of the view that bootstrapped is no external funding; sounds like fundstrapped is a better term. Maybe seed funded.
  - ipaddr 5y ago
    A 5 thousand dollar gift or loan? Or a trade of $5,000 for a percentage? Bootstrap is a word with a specific meaning. It is not a spectrum it is a specific state of a spectrum. It sounds like ScrapeBee has more bootstraping elements than VC elements. It's a hybrid. Less VC pressures but still some.
    - deleted 5y ago
      [deleted]
  - threeseed 5y ago
    Then you can say "ScrapingBee is closer to a bootstrapped company". That doesn't mean it actually is one though. And actually muddying what terms mean is the unhelpful part.
codegeek 5y ago
As another bootstrapped founder, I disagree with you. "Our standard terms are for 10-12% equity." The moment you give equity in exchange for money no matter whether its tinyseed or whatever, you are not bootstrapping. Your financial risk is lower because you don't have to pay this money back if your company fails. That is not called bootstrapping. I bootstrapped with my own money AND some smaller loans which I am fully liable to pay off with a personal guarantee. If my business goes down, I am personally liable. That is bootstrapping.
- floridageorgia 5y ago
  My 2c as a bootstrapping founder (who has not taken outside money): I don't think there is any virtue in funding your business with your own money. Call yourself bootstrapped or funded, what ultimately matters is that the business survives and thrives.
  - whimsicalism 5y ago
    Sure, but words have meaning and bootstrapping is specifically about not selling ownership for cash
    - dustingetz 5y ago
      .
      - whimsicalism 5y ago
        i don't understand what there is to argue over, i am just saying what the word means.
  - xboxnolifes 5y ago
    Right, but it's still not a bootstrapped business.
- lmeyerov 5y ago
  Important for others: Some loans do not extend this way and thus company bankruptcy (US) can protect you, so just opportunity cost. But the terms are generally bad, and why firms like tinyseed exist, esp. once revenue starts growing (though at that point you can potentially get a SAFE at better terms...). Money is so sensitive! A Google millionaire bootstrapping on surveillance savings or a doctor taking favorable loans for starting a practice is different from say a college grad bootstrapping on no savings. Most SaaS is especially hard as there is typically no real revenue for ~years, compared to say B2B where each customer can easily pay for .5-5 people. So if operational expenses come from revenue, including sales/marketing/r&d, bravo.
moralestapia 5y ago
>if you consider that bootstrapping is building a business without external funding Yes. Yes, we do. You didn't bootstrap, period. Also, what a strange hill to die on ...
j4yav 5y ago
Certainly it must be a lot easier to bootstrap a company if you sell equity to investors to enable working on it full time, but are you still really bootstrapping your app at that point? Even if you only sell as little equity as you need to to pay the bills until the app is able to pay for itself?
threeseed 5y ago
> bootstrapping VS "VC road" is much more nuanced Sure. But don't try and redefine what bootstrap means. It means building your company without requiring any professional investors and without modifying your cap table. You've done neither.
- mathgladiator 5y ago
  TinySeed calls itself "The First Accelerator Designed for SaaS Bootstrappers", so perhaps there is a schism in the definition.
- cj 5y ago
  My definition of bootstrapping has more to do with the mindset you have while running the company, rather than whether the company actually has investors. There’s always someone putting money into getting a new business up and running (bootstrapping is not free). Whether that small amount of money comes from the founder’s pocket, family/friends, or an angel investor - the money to pay your AWS bill and other basic services has to come from somewhere. Bootstrapping is an operational mentality IMO.
  - threeseed 5y ago
    You really don't understand bootstrapping do you. So my partner started a business during COVID. We don't have rich family/friends or know any angel investors and so we paid for costs by selling things, using savings and maxing out credit cards. No outside money. No modification to a cap table (not that it exists).
    - cj 5y ago
      If tomorrow you decided to go and raise $100k from an angel (or if you received a $100k small business grant) to pay off your credit card debt and replenish some of your savings, I wouldn't immediately kick you out of the "bootstrapped founder" community. I see your point though. There is "pure 100% bootstrapped" and "mostly bootstrapped, but not completely". IMO it's a spectrum. Just like the term "startup" - it's a spectrum, no binary definition.
deleted 5y ago
[deleted]
masterof0 5y ago
> HNer here, I was waiting for this comment to be honest. So in essence, if you consider that being a billionaire is having a billion dollars, you're correct. But to me, being a billionaire VS "a regular dude" is much more nuanced than this. Being a billionaire is a state of mind.....yadda yadda

by daolf 5y ago

czbond 5y ago

@Daolf - congrats on the building, definitely NOT easy to do. What growth metrics did Tiny look at? Did the investment come at a time when the business was needing to "survive, sustain, or grow"? [every business has all of those phases]

daolf 5y ago
Thanks a lot. > What growth metrics did Tiny look at? I assume you mean during the application process. So they asked just the basic stuff, MRR, growth, churn. We were at $1k5 MRR when we applied and $3k when we got it. I think what worked for us during the process was that Kevin had been running a small Java web scraping blog + book at that time. > Did the investment come at a time when the business was needing to "survive, sustain, or grow"? We were slowly switching from survival to sustain mode. They allowed to make the transition and go full grow mode.
- robocat 5y ago
  > They allowed to make the transition and go full grow mode. The point of bootstrapping is making the compromise where you trade a lower growth rate for the benefit of retaining 100% ownership of your business. Your statement is a VC funding model, even if the money is called seed and you are not trying to become a unicorn. Your giving away equity for money is simply not bootstrapping. Calling your business bootstrapped is lying in my opinion. What I think doesn’t matter, but being deceitful is silently judged by others where their opinions do matter to you, and the consequences of that are usually invisible.

jgmmo 5y ago

bootstrap = on your own. That's it. You had some seed funding.

artembugara 5y ago
Founder of another TonySeed startup. On your own can mean many things. I also burnt through my personal savings for the first year. So. On your own is just “VC’ed yourself” Taking money from TinySeed is very different than taking money from VC.
- capableweb 5y ago
  > So. On your own is just “VC’ed yourself” Precisely. If TinySeed has provided funds, it's no longer "VC'ed yourself", it's "VC'ed yourself + tiny seed from TinySeed". > Taking money from TinySeed is very different than taking money from VC. No one is arguing that TinySeed is just like any other VC. But instead that by accepting VC, you could no longer claim the business to be bootstrapped.
  - BBC-vs-neolibs 5y ago
    So if I start with $1M of my own money, is it bootstrapped? If family (with fuzzy conditions) ponied up $250k, is it bootstrapped?
    - Bjartr 5y ago
      $1M of your money? Yes $250k from immediate family, if said fuzzy conditions don't confer any ownership or repayment? I'd say just barely yes (it's basically a gift to you at that point, which is then your money) $250k from a third cousin in return for equity? No. Being bootstrapped isn't an ungameable category, but it is a fairly unambiguous one IMO.
      - deleted 5y ago
        [deleted]
- 5y ago

djbusby 5y ago

Hmm, but TinySeed now as a position in your captable. They are outside money. I think bootstrap means 100% your own money and customer money (revenue)

hooande 5y ago

Not sure why you needed the TinySeed money. It looks like you were only a few months away from $10k/mo, which seems near the boundary for sustainable income. Was there some investment you were able to make with the TinySeed money that pushed you over the line? Maybe I missed this in your post, but did you utilize search advertising? That seems to be the most common and effective tool for short term growth

daolf 5y ago
So to be honest, we ran the math and never actually spent TinySeed money. We could have mathematically made without it. But three things to consider here: - TS money multiplied our runway by 10 and really reduced the amount stress we've experienced. Especially with COVID, during which we experienced our first negative growth month - We were able to finally pay ourselves above minimum wage (1,500$) - The mentoring and advices which came out of the program, really made the whole difference. Where we live, the startup ecosystem is basically 0, we don't know a lot of startup funders or experienced entrepreneur. It changes everything when you can ask a precise question about business and get a response from an expert in the next 6 hours. We had call with mentors and other member of the community, basically a one hour free consulting with an expert, about SEO, copywriting, recruiting, sales, growth, and marketing and THIS does move the needle a lot.

capableweb 5y ago

I understand that TinySeed is different than the typical doing VC roadshows and having crazy growth, that wasn't my point. I also understand that the amount you received from TinySeed wasn't probably too crazy, it's in their name after all; tiny seed. But that name also contains what they do, they provide seed funding. Instead of contrasting Bootstrap VS Crazy-VC-Mode, it's more suitable to compare two different things. One is if you're bootstrapped or not, and if you're not, are you doing Tiny-VC-Mode or Crazy-VC-Mode? In this case you chose not to be bootstrapped, and are doing the Tiny-VC-Mode. It's great that going Tiny-VC-Mode allowed you to grow at your speed and still remain independent, much better than the Crazy-VC-Mode usually allows. But if we start calling that "bootstrapped", then where does the line go for what is bootstrapping a business or not. The meaning would have to change from "Without any outside money" to "With a little bit of outside money, but still independent" which says something else. Edit: Another way to see it: You still bootstrapped the early stages of the company, up until the point where you accepted outside investments. So according to you post, you joined TinySeed in May 2020, which your graph under "Slowly reaching $10k MRR" (https://d33wubrfki0l68.cloudfront.net/e1ea487c1823d29fb55da41f739e4e0d93051071/3febc/images/about-us/10kmrr.png https://d33wubrfki0l68.cloudfront.net/e1ea487c1823d29fb55da4...) show to be right around $5K MRR. So what you bootstrapped was up until "$60000 ARR", but after that you were no longer bootstrapped as TinySeed provided capital to you.

mbesto 5y ago

Nice little meta discussion we have here... Once again another thread where no one seems to agree on what constitutes venture capital and what a startup is. By definition - you took a minority investment. Bootstrapping, colloquially, means you have not funded your company with any equity or capital that could be converted to equity. btw - you got attention by saying you were bootstrapped and since this is just marketing material then kudos to you for the good marketing.

mattlutze 5y ago

The common use for "bootstrapping" is using personal capital and then funding the business with its own proceeds. If you'd say "How we grew our business without traditional VCs" that'd be an excellent title. What you describe in your comment here sounds like an interesting alternative approach. But the way it's introduced looks like an article about how a 25 year old bought their own house, and step 5 is "my parents took the mortgage and I pay them rent."

jasode 5y ago

>But to me, bootstrapping VS "VC road" is much more nuanced than this. I went to the "TinySeed.com" website landing page and I do see that they prominently advertise "The First Accelerator Designed for SaaS Bootstrappers". And then their FAQ page has these example financial terms: >TinySeed invests $120k for the first founder, $60k for the second, and $40k for the third. Our standard terms are for 10-12% equity. -- from https://tinyseed.com/program#program-faq https://tinyseed.com/program#program-faq Well, if founders accept those terms, they are no longer "bootstrapping" as people generally understand that word. Yes, you may have been bootstrapping right up to the point _before_ taking TinySeed $180k but after that outside capital infusion, "bootstrapping" literally no longer applies. It doesn't seem like any nuance is necessary. It's quite a binary status.

jt2190 5y ago
I guess we can debate the existence of the “True Bootstrapper”, but that’s not a very interesting conversation. The term “bootstrapping” predates the existence of funding sources like TinySeed, and is now outdated. It was never terribly precise anyway, e.g. if someone saves up an “initial investment” amount of money before starting, are they bootstrapping? What about having a spouse who pays the bills while starting? The digital age has also introduced a whole new range of funding options that didn’t exist very long ago, crowdfunding for example.
- jasode 5y ago
  >I guess we can debate the existence of the “True Bootstrapper”, but that’s not a very interesting conversation. I'm a language descriptivist not prescriptivist so I don't care to debate it but just pointing out that the founders are using "bootstrapped" in a confusing way that contradicts how others understand it. (Which then causes meta discussion of founders trying to educate readers on the nuances of what "bootstrap" means.) Compare the financial equity cap table terms to YC. When YC terms were $120k for 7% equity, people (generally) didn't call all those annual YC batch applicants "bootstrap companies". E.g. we (generally) did not say "DropBox is a bootstrapped company", "AirBNB is a bootstrapped company". But TinySeed funding means it's a bootstrapped company?!? Doesn't that seem inconsistent? Taking outside funding from professional investors for equity stakes typically wasn't seen as bootstrapping. My point is that it's a whole heck of a lot easier if you shed the "bootstrap" label when the financial status changes. It's not a flaw or being evil to lose that label. Why is it so psychologically necessary to keep it?

btown 5y ago

To me, it's really important that the tech community define "bootstrapping" as no more and no less than "having a plan to reach profitability with total investment on the order of what a [not-outrageously-wealthy] group of founders might invest," and to frame it as a good thing. With TinySeed's round at "$120k for the first founder, $60k for the second, and $40k for the third" (https://tinyseed.com/program#program-faq https://tinyseed.com/program#program-faq) this is very much along those lines. If one further gatekeeps the label with "but the founders need to invest this personally or it doesn't count..." that restricts the label to a very small segment of privileged individuals. And in a world where there's a (false) narrative of a "bootstrapped or VC backed" binary, that gatekeeping reinforces the notion that less privileged founders have no choice but to go the VC route or do nothing at all. I would hazard a guess that great ideas and great societal impacts have been lost as a result of this framing.

mbesto 5y ago
> it's really important that the tech community define "bootstrapping" More importantly we should probably define what a "startup" is. No one seems to agree on a definition there.
daolf 5y ago
That is very elegantly said. 100% agree with you.
jasode 5y ago
>, it's really important that the tech community define "bootstrapping" as [...] With TinySeed's round at "$120k for the first founder, $60k for the second, and $40k for the third" (https://tinyseed.com/program#program-faq https://tinyseed.com/program#program-faq) this is very much along those lines. But when YC invested $120k for 7% equity, we typically didn't call all those startups like Dropbox/AirBNB etc "bootstrapped companies". And $180k for 2 founders is more than YC's previous terms. >If one further gatekeeps the label with It's unfair to call it "gatekeeping" rather than a case of confusing many readers with a headline that flips the meaning of "bootstrapping".
- 5y ago

PragmaticPulp 5y ago

I appreciate the honesty and the article, but it would have been just as interesting (and more authentic) if you would simply be honest: “How we got to $1mm ARR with only a tiny seed round”. Reading an article and immediately recognizing inconsistencies is an instant turn-off for me, and I assume many other readers. I don’t see what you think you’re gaining by being misleading with the headline.

rglover 5y ago

Bootstrapping means you funded the entire thing out of pocket without any outside investment. There's nothing bad/wrong about how you did it, but it's not bootstrapping. Saying it is makes it confusing for newbies which means they're more likely to be taken advantage of by VCs that realize they can market themselves as a "bootstrapper fund."

kohanz 5y ago
Thinking about it in such binary terms is quite limiting and unhelpful though. It's a spectrum. I would consider ScrapingBee closer to a bootstrapped company than a venture-funded company. Heck, by your definition if I took $5k of friends & family money to start a business that grew to $5M ARR,I could not call that "bootstrapped". This is why Rob Walling (co-founder of TinySeed) likes to use the term "fundstrapped". There are a lot more funding options out there that do not come with the narrow pathway associated with typical venture funding.
- cjbgkagh 5y ago
  It seems there are some definitions that allow for some external funding. I’m of the view that bootstrapped is no external funding; sounds like fundstrapped is a better term. Maybe seed funded.
- ipaddr 5y ago
  A 5 thousand dollar gift or loan? Or a trade of $5,000 for a percentage? Bootstrap is a word with a specific meaning. It is not a spectrum it is a specific state of a spectrum. It sounds like ScrapeBee has more bootstraping elements than VC elements. It's a hybrid. Less VC pressures but still some.
  - deleted 5y ago
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- threeseed 5y ago
  Then you can say "ScrapingBee is closer to a bootstrapped company". That doesn't mean it actually is one though. And actually muddying what terms mean is the unhelpful part.

codegeek 5y ago

As another bootstrapped founder, I disagree with you. "Our standard terms are for 10-12% equity." The moment you give equity in exchange for money no matter whether its tinyseed or whatever, you are not bootstrapping. Your financial risk is lower because you don't have to pay this money back if your company fails. That is not called bootstrapping. I bootstrapped with my own money AND some smaller loans which I am fully liable to pay off with a personal guarantee. If my business goes down, I am personally liable. That is bootstrapping.

floridageorgia 5y ago
My 2c as a bootstrapping founder (who has not taken outside money): I don't think there is any virtue in funding your business with your own money. Call yourself bootstrapped or funded, what ultimately matters is that the business survives and thrives.
- whimsicalism 5y ago
  Sure, but words have meaning and bootstrapping is specifically about not selling ownership for cash
  - dustingetz 5y ago
    .
    - whimsicalism 5y ago
      i don't understand what there is to argue over, i am just saying what the word means.
- xboxnolifes 5y ago
  Right, but it's still not a bootstrapped business.
lmeyerov 5y ago
Important for others: Some loans do not extend this way and thus company bankruptcy (US) can protect you, so just opportunity cost. But the terms are generally bad, and why firms like tinyseed exist, esp. once revenue starts growing (though at that point you can potentially get a SAFE at better terms...). Money is so sensitive! A Google millionaire bootstrapping on surveillance savings or a doctor taking favorable loans for starting a practice is different from say a college grad bootstrapping on no savings. Most SaaS is especially hard as there is typically no real revenue for ~years, compared to say B2B where each customer can easily pay for .5-5 people. So if operational expenses come from revenue, including sales/marketing/r&d, bravo.

moralestapia 5y ago

>if you consider that bootstrapping is building a business without external funding Yes. Yes, we do. You didn't bootstrap, period. Also, what a strange hill to die on ...

j4yav 5y ago

Certainly it must be a lot easier to bootstrap a company if you sell equity to investors to enable working on it full time, but are you still really bootstrapping your app at that point? Even if you only sell as little equity as you need to to pay the bills until the app is able to pay for itself?

threeseed 5y ago

> bootstrapping VS "VC road" is much more nuanced Sure. But don't try and redefine what bootstrap means. It means building your company without requiring any professional investors and without modifying your cap table. You've done neither.

mathgladiator 5y ago
TinySeed calls itself "The First Accelerator Designed for SaaS Bootstrappers", so perhaps there is a schism in the definition.
cj 5y ago
My definition of bootstrapping has more to do with the mindset you have while running the company, rather than whether the company actually has investors. There’s always someone putting money into getting a new business up and running (bootstrapping is not free). Whether that small amount of money comes from the founder’s pocket, family/friends, or an angel investor - the money to pay your AWS bill and other basic services has to come from somewhere. Bootstrapping is an operational mentality IMO.
- threeseed 5y ago
  You really don't understand bootstrapping do you. So my partner started a business during COVID. We don't have rich family/friends or know any angel investors and so we paid for costs by selling things, using savings and maxing out credit cards. No outside money. No modification to a cap table (not that it exists).
  - cj 5y ago
    If tomorrow you decided to go and raise $100k from an angel (or if you received a $100k small business grant) to pay off your credit card debt and replenish some of your savings, I wouldn't immediately kick you out of the "bootstrapped founder" community. I see your point though. There is "pure 100% bootstrapped" and "mostly bootstrapped, but not completely". IMO it's a spectrum. Just like the term "startup" - it's a spectrum, no binary definition.

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masterof0 5y ago

> HNer here, I was waiting for this comment to be honest. So in essence, if you consider that being a billionaire is having a billion dollars, you're correct. But to me, being a billionaire VS "a regular dude" is much more nuanced than this. Being a billionaire is a state of mind.....yadda yadda