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It is validation that (in theory) someone has peeked behind the curtain and done some due diligence on the startup and put money on the line as a bet that the c

It is validation that (in theory) someone has peeked behind the curtain and done some due diligence on the startup and put money on the line as a bet that the company has a chance to be a success. Compare that to some other startup that was unable to get any investors. That said, I would rather be a bootstrapped startup with revenue than one that raised a lot of money.

b20000 5y ago
bootstrapping sounds cool and i’ve done that for many years. at some point you need money to grow because hiring people is super expensive and/or risky and marketing is not free either. so if you cannot generate enough cash to pay for that you are stuck. you are then basically still juggling all the work yourself perhaps with your cofounder and no investor will touch you because they think you are weird or don’t want to work with people even though the business is valid and the potential is huge given a investment. most investors are not very smart, have little operating experience and are not very good at listening. looking back i would never start a company again with my own money as the journey is brutal. i would rather have an investor on board, be able to hire people and pay myself rather than being broke for many years and working myself to death.
- ilrwbwrkhv 5y ago
  I mean companies like MailChimp became a billion dollar company without any of that. I think it can still work but most people have blinders on.
  - b20000 5y ago
    not sure how bootstrapping works today, marketing is really expensive. i don’t believe organic SEO works anymore. so you need to buy ads which is $$$$$.
    - ilrwbwrkhv 5y ago
      not really just look at canny.io https://twitter.com/sarahhum/status/1461378442256072712 https://twitter.com/sarahhum/status/1461378442256072712
      - b20000 5y ago
        not sure what I'm looking at. Do you mean that canny is an example of a startup that "made it" without spending money on marketing? or do you mean that I should use canny for marketing? If it's the former, how do you know they did not spend money on marketing and that their user base grew "magically" just because the product is great? also, 9 person team right from day 0 without funding. I wonder how that happened. people create great products all the time that get no traction.
        ilrwbwrkhv 5y ago
        they are an example of "bootstrapping works". the founders created enough revenue to slowly hire that team. they didn't have that from day 0. again, this is how actual real sustainable businesses are created. they can raise money now if they want, not the ones with 0 revenue.
- devoutsalsa 5y ago
  Imagine trying to bootstrap a semiconductor or EV company. Or a rocket company.
  - zozbot234 5y ago
    A semiconductor or EV company is not borrowing to chase "hyper growth", though. They need that money to literally set up shop.
    - devoutsalsa 5y ago
      Having worked for a semiconductor startup (Transmeta) that raised $500-ish million, I can assure you they spent plenty on marketing.
    - b20000 5y ago
      setting up shop is not enough. sooner or later you need to pay for marketing which costs a lot of money. all this worth of mouth viral shit is BS IMHO.
  - b20000 5y ago
    i am in the hardware business, so pretty close
dcolkitt 5y ago
The problem with bootstrapping is that eventually you'll hit an inflection point where the viability of the business model starts becoming visible. At that point you'll most likely start attracting competition. Unless it's a niche a business with a small TAM, your competitors will most likely raise VC funding to throw cash at hyper growth in a way you can't while staying cash flow disciplined. In today's environment VC capital is nearly ubiquitous. So you have to assume that sooner or later you'll run up against VC-funded competitors. If you don't have a game plan to survive as a bootstrapped business when that day comes, then you pretty much have to raise VC funding.
- zozbot234 5y ago
  It's not obvious that VC funding helps your long term survival, though. It's a loan, and it has to be paid back at some time, often in ways that are detrimental in the longer term. "Hypergrowth" is mostly a myth anyway: slow and steady will win any race.
  - enigmatic02 5y ago
    VC capital is useful assuming it's a winner-takes-all / capital-intensive market, but many markets are not, in which case optimizing for $ raised is actually a distraction Example: Delicious was sold to bootstrapped competitor, Pinboard for only $35K. Pinboard is still around to this day https://www.productlessons.xyz/article/pinboard-delicious-failed-startup https://www.productlessons.xyz/article/pinboard-delicious-fa...
  - netsharc 5y ago
    Linus (Tech Tips) has a good video about why external investment is useful: https://www.youtube.com/watch?v=LSxbc1IN9Gg https://www.youtube.com/watch?v=LSxbc1IN9Gg , but he's talking about a hardware company, which is probably different to a software one. Skip to around 5:00 to get to topic.
- anamax 5y ago
  > The problem with bootstrapping is that eventually you'll hit an inflection point where the viability of the business model starts becoming visible. At that point you'll most likely start attracting competition. Unless it's a niche a business with a small TAM, your competitors will most likely raise VC funding to throw cash at hyper growth in a way you can't while staying cash flow disciplined. You can choose to take investment then, but it will be on much better terms than your competitors get. It's likely that you'll be able to raise more with less dilution. Or, you can sell.

b20000 5y ago

bootstrapping sounds cool and i’ve done that for many years. at some point you need money to grow because hiring people is super expensive and/or risky and marketing is not free either. so if you cannot generate enough cash to pay for that you are stuck. you are then basically still juggling all the work yourself perhaps with your cofounder and no investor will touch you because they think you are weird or don’t want to work with people even though the business is valid and the potential is huge given a investment. most investors are not very smart, have little operating experience and are not very good at listening. looking back i would never start a company again with my own money as the journey is brutal. i would rather have an investor on board, be able to hire people and pay myself rather than being broke for many years and working myself to death.

ilrwbwrkhv 5y ago
I mean companies like MailChimp became a billion dollar company without any of that. I think it can still work but most people have blinders on.
- b20000 5y ago
  not sure how bootstrapping works today, marketing is really expensive. i don’t believe organic SEO works anymore. so you need to buy ads which is $$$$$.
  - ilrwbwrkhv 5y ago
    not really just look at canny.io https://twitter.com/sarahhum/status/1461378442256072712 https://twitter.com/sarahhum/status/1461378442256072712
    - b20000 5y ago
      not sure what I'm looking at. Do you mean that canny is an example of a startup that "made it" without spending money on marketing? or do you mean that I should use canny for marketing? If it's the former, how do you know they did not spend money on marketing and that their user base grew "magically" just because the product is great? also, 9 person team right from day 0 without funding. I wonder how that happened. people create great products all the time that get no traction.
      - ilrwbwrkhv 5y ago
        they are an example of "bootstrapping works". the founders created enough revenue to slowly hire that team. they didn't have that from day 0. again, this is how actual real sustainable businesses are created. they can raise money now if they want, not the ones with 0 revenue.
devoutsalsa 5y ago
Imagine trying to bootstrap a semiconductor or EV company. Or a rocket company.
- zozbot234 5y ago
  A semiconductor or EV company is not borrowing to chase "hyper growth", though. They need that money to literally set up shop.
  - devoutsalsa 5y ago
    Having worked for a semiconductor startup (Transmeta) that raised $500-ish million, I can assure you they spent plenty on marketing.
  - b20000 5y ago
    setting up shop is not enough. sooner or later you need to pay for marketing which costs a lot of money. all this worth of mouth viral shit is BS IMHO.
- b20000 5y ago
  i am in the hardware business, so pretty close

dcolkitt 5y ago

The problem with bootstrapping is that eventually you'll hit an inflection point where the viability of the business model starts becoming visible. At that point you'll most likely start attracting competition. Unless it's a niche a business with a small TAM, your competitors will most likely raise VC funding to throw cash at hyper growth in a way you can't while staying cash flow disciplined. In today's environment VC capital is nearly ubiquitous. So you have to assume that sooner or later you'll run up against VC-funded competitors. If you don't have a game plan to survive as a bootstrapped business when that day comes, then you pretty much have to raise VC funding.

zozbot234 5y ago
It's not obvious that VC funding helps your long term survival, though. It's a loan, and it has to be paid back at some time, often in ways that are detrimental in the longer term. "Hypergrowth" is mostly a myth anyway: slow and steady will win any race.
- enigmatic02 5y ago
  VC capital is useful assuming it's a winner-takes-all / capital-intensive market, but many markets are not, in which case optimizing for $ raised is actually a distraction Example: Delicious was sold to bootstrapped competitor, Pinboard for only $35K. Pinboard is still around to this day https://www.productlessons.xyz/article/pinboard-delicious-failed-startup https://www.productlessons.xyz/article/pinboard-delicious-fa...
- netsharc 5y ago
  Linus (Tech Tips) has a good video about why external investment is useful: https://www.youtube.com/watch?v=LSxbc1IN9Gg https://www.youtube.com/watch?v=LSxbc1IN9Gg , but he's talking about a hardware company, which is probably different to a software one. Skip to around 5:00 to get to topic.
anamax 5y ago
> The problem with bootstrapping is that eventually you'll hit an inflection point where the viability of the business model starts becoming visible. At that point you'll most likely start attracting competition. Unless it's a niche a business with a small TAM, your competitors will most likely raise VC funding to throw cash at hyper growth in a way you can't while staying cash flow disciplined. You can choose to take investment then, but it will be on much better terms than your competitors get. It's likely that you'll be able to raise more with less dilution. Or, you can sell.