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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 poin

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.
bruce511 5y ago
Hypergrowth is really a B2C thing. You don't really get hyper-growth for B2B with capital. For example, Microsoft has all the cash in the world, but it took ages for Windows server or MSSql to gain significant market share. Oracle grew "slowly" in a bootstrapped kind of way, selling expensive product and so on. Despite the "hyper growth" of startups (mysql?) oracle is still a gold standard for databases (as determined by mindshare in companies.) Yes there are VC winners, but as we know most VC companies are losers. Having a VC compeditor is fine, they burn hot, create buzz for your market space, validate your product existance, and then typically flame out, leaving market demand, and lots of trained experienced people to employ. Bootstrapping is indeed a long hard road, with no easy riches, and again most companies will fail, but if you look around pretty much every company that exists in the world (outside tech) was bootstrapped [1], and even most companies inside tech were bootstrapped. [1] I'm defining bootstrapped here as no-Vc-money. Bootstrapped companies typically have some small amount of seed money to start, and require a large time investment.

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.

bruce511 5y ago

Hypergrowth is really a B2C thing. You don't really get hyper-growth for B2B with capital. For example, Microsoft has all the cash in the world, but it took ages for Windows server or MSSql to gain significant market share. Oracle grew "slowly" in a bootstrapped kind of way, selling expensive product and so on. Despite the "hyper growth" of startups (mysql?) oracle is still a gold standard for databases (as determined by mindshare in companies.) Yes there are VC winners, but as we know most VC companies are losers. Having a VC compeditor is fine, they burn hot, create buzz for your market space, validate your product existance, and then typically flame out, leaving market demand, and lots of trained experienced people to employ. Bootstrapping is indeed a long hard road, with no easy riches, and again most companies will fail, but if you look around pretty much every company that exists in the world (outside tech) was bootstrapped [1], and even most companies inside tech were bootstrapped. [1] I'm defining bootstrapped here as no-Vc-money. Bootstrapped companies typically have some small amount of seed money to start, and require a large time investment.