3 ms·

Ask YC: Is your startup bootstrapped, funded, or both?

10 points by shafqat 18y ago

Would be interesting to see the diversity of startups and their funding situation given all the turmoil and doom/gloom postings recently.

shafqat 18y ago
I'll start: I'm cofounder of NewsCred. We are 100% boostrapped so far with very negligible burn rate. About to close a small angel round.
cperciva 18y ago
Neither. Tarsnap isn't profitable yet, so I can't really say that it's bootstrapped; but I don't have any external funding, either. Rather than being bootstrapped or funded, tarsnap is a living-in-the-parents'-basement startup.
- nostrademons 18y ago
  I've sometimes wondered whether that should count as a "friends & family" investment. After all, family's putting up the money (in the form of subsidized rent) for the startup. And does the status change to "self-funded" if you pay your parents rent?
  - cperciva 18y ago
    I don't think it qualifies as a "friends & family" investment, since they're not getting stock. But you could certainly call it a friends & family donation. :-) And does the status change to "self-funded" if you pay your parents rent? It would, but I don't.
nostrademons 18y ago
Probably should make a distinction between "bootstrapped" and "self-funded" here. Technically, a bootstrapped startup is one that sells a nonexistent product to an early-adopter customer first, and then uses that money to fund development. Or one that starts as a consulting company and then gradually builds out a product based on client needs. Think of Sun, Allegro, 37signals, or FogCreek. A self-funded company is one that relies on founder savings or wage income to fund initial development, and then finds a customer after they have a product. Think Del.icio.us or Flickr before their angel investments. Anyway, my last startup (GameClay) was 100% self-funded. If I choose to do another startup instead of taking a job, it'll also be self-funded, but I'll probably focus on identifying paying customers and generating revenue earlier in the process, which would make it closer to a bootstrapped startup.
- lux 18y ago
  Interesting, I didn't know that difference between bootstrapped and self-funded. I figured there was a degree of self-funding involved in the early stage of most companies and that you were "bootstrapped" until you were funded or an established business and hence not a "startup" any more... I guess we would be considered bootstrapped then :)
  - cperciva 18y ago
    Given that "bootstrapping" refers to the (physically impossible) process of lifting oneself into the air by pulling on one's boot-straps, I think it has to be restricted to the concept of growing a company using the company's own revenues.
    - ph0rque 18y ago
      In the real world, if you try to pull yourself up by the bootstraps, you fall flat on your face (try it if you don't believe me).
      - cperciva 18y ago
        Are you sure about that? If you pull yourself up by your shoelaces, you'll certainly fall on your face; but I think if I tried to pull myself up by my bootstraps, I'd probably end up falling backwards.
        ph0rque 18y ago
        Depends on whether you're leaning forward as you are pulling.
- MicahWedemeyer 18y ago
  I've read your diffle-history blog, and it's amazing the parallels I've seen with my own work. I'm spinning up my second startup now, and taking a similarly revenue-oriented approach. Forget about pageviews and popularity and focus on revenue. However, I'm also going to focus on possibly getting angel funding this time around.
puzzle-out 18y ago
My co-founder and I have cut taking a salary from our start-up, which is angel funded. We've both taken (surprisingly well paid) part-time jobs at a local university as mentors to a group of 60 business students on an enterprise module. It's like being back in the garage - recharges the entrepreneurial batteries, keeps the investors happy, and we're meeting future potential employees. HIghly recommended.
sgrove 18y ago
We're between self-funded and bootstrapped - we put up a small initial monetary investment for servers and whatnot, and evangelized the product as we built it. That being said, we're working on some big grant opportunities right now (the economic turmoil actually works in our favor to some degree), so I suppose we'll be "funded" soon, though without giving up any equity. Really, there are probably endless ways of mixing and matching these different methods.
dshah 18y ago
My startup (http://www.HubSpot.com http://www.HubSpot.com) started off self-funded but is now venture-funded ($17 million in two rounds of funding).
- shafqat 18y ago
  That's great.. have read a lot about you on your blog. Are you guys generating revenue?

10 points by shafqat 18y ago

Would be interesting to see the diversity of startups and their funding situation given all the turmoil and doom/gloom postings recently.

shafqat 18y ago

I'll start: I'm cofounder of NewsCred. We are 100% boostrapped so far with very negligible burn rate. About to close a small angel round.

cperciva 18y ago

Neither. Tarsnap isn't profitable yet, so I can't really say that it's bootstrapped; but I don't have any external funding, either. Rather than being bootstrapped or funded, tarsnap is a living-in-the-parents'-basement startup.

nostrademons 18y ago
I've sometimes wondered whether that should count as a "friends & family" investment. After all, family's putting up the money (in the form of subsidized rent) for the startup. And does the status change to "self-funded" if you pay your parents rent?
- cperciva 18y ago
  I don't think it qualifies as a "friends & family" investment, since they're not getting stock. But you could certainly call it a friends & family donation. :-) And does the status change to "self-funded" if you pay your parents rent? It would, but I don't.

nostrademons 18y ago

Probably should make a distinction between "bootstrapped" and "self-funded" here. Technically, a bootstrapped startup is one that sells a nonexistent product to an early-adopter customer first, and then uses that money to fund development. Or one that starts as a consulting company and then gradually builds out a product based on client needs. Think of Sun, Allegro, 37signals, or FogCreek. A self-funded company is one that relies on founder savings or wage income to fund initial development, and then finds a customer after they have a product. Think Del.icio.us or Flickr before their angel investments. Anyway, my last startup (GameClay) was 100% self-funded. If I choose to do another startup instead of taking a job, it'll also be self-funded, but I'll probably focus on identifying paying customers and generating revenue earlier in the process, which would make it closer to a bootstrapped startup.

lux 18y ago
Interesting, I didn't know that difference between bootstrapped and self-funded. I figured there was a degree of self-funding involved in the early stage of most companies and that you were "bootstrapped" until you were funded or an established business and hence not a "startup" any more... I guess we would be considered bootstrapped then :)
- cperciva 18y ago
  Given that "bootstrapping" refers to the (physically impossible) process of lifting oneself into the air by pulling on one's boot-straps, I think it has to be restricted to the concept of growing a company using the company's own revenues.
  - ph0rque 18y ago
    In the real world, if you try to pull yourself up by the bootstraps, you fall flat on your face (try it if you don't believe me).
    - cperciva 18y ago
      Are you sure about that? If you pull yourself up by your shoelaces, you'll certainly fall on your face; but I think if I tried to pull myself up by my bootstraps, I'd probably end up falling backwards.
      - ph0rque 18y ago
        Depends on whether you're leaning forward as you are pulling.
MicahWedemeyer 18y ago
I've read your diffle-history blog, and it's amazing the parallels I've seen with my own work. I'm spinning up my second startup now, and taking a similarly revenue-oriented approach. Forget about pageviews and popularity and focus on revenue. However, I'm also going to focus on possibly getting angel funding this time around.

puzzle-out 18y ago

My co-founder and I have cut taking a salary from our start-up, which is angel funded. We've both taken (surprisingly well paid) part-time jobs at a local university as mentors to a group of 60 business students on an enterprise module. It's like being back in the garage - recharges the entrepreneurial batteries, keeps the investors happy, and we're meeting future potential employees. HIghly recommended.

sgrove 18y ago

We're between self-funded and bootstrapped - we put up a small initial monetary investment for servers and whatnot, and evangelized the product as we built it. That being said, we're working on some big grant opportunities right now (the economic turmoil actually works in our favor to some degree), so I suppose we'll be "funded" soon, though without giving up any equity. Really, there are probably endless ways of mixing and matching these different methods.

dshah 18y ago

My startup (http://www.HubSpot.com http://www.HubSpot.com) started off self-funded but is now venture-funded ($17 million in two rounds of funding).

shafqat 18y ago
That's great.. have read a lot about you on your blog. Are you guys generating revenue?