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I can list a hundred tech companies that wouldn't have been successful / acquired had they not raised money. You couldn't really bootstrap Twitter. Or most medi

by mikekij 13y ago

I can list a hundred tech companies that wouldn't have been successful / acquired had they not raised money. You couldn't really bootstrap Twitter. Or most medical device companies. I have a friend bootstrapping a company right now. He is growing organically, and is cash flow positive. He'll likely be acquired in 4 years for about $20M. That's awesome. But if he would have raised just $3M, he could have built his product in 18 months instead of 5 years. In the end, he'll have the satisfaction of having bootstrapped. But from a purely financial perspective, I think he would have been better off raising money and exiting (or being even more profitable) faster.

sgeisenh 13y ago
I think, within a certain threshold, it is definitely more financially responsible to bootstrap. Though, I agree with your point about Twitter, etc: if you're a seasoned developer/entrepreneur with a large scale idea that requires serious capital to get off the ground, you can't bootstrap. But for something that is effective at a small scale and can be built from the ground up, the timeline only shifts a small amount (so long as you pursue all marketing avenues available). I'm assuming that your friend evaluated the risks of fundraising and made a reasoned choice. I don't think it is fair to reason about his venture in hindsight.
ibrad 13y ago
A hundred tech companies are still an exception. Yes building an amazon type of business requires more than your savings, but it is not what most businesses are doing. Joel Spolsky made a very interesting post about it[1]. A lot of companies, that are clearly not going to be Amazon sized one day, are looking for investors just so they can make another bufferapp type of deal. We always list Twitter, Facebook, Google, and those hundreds you are refering to, but those are a handful compare to everything that is out there. [1]: http://www.joelonsoftware.com/articles/fog0000000056.html http://www.joelonsoftware.com/articles/fog0000000056.html

by mikekij 13y ago

sgeisenh 13y ago

I think, within a certain threshold, it is definitely more financially responsible to bootstrap. Though, I agree with your point about Twitter, etc: if you're a seasoned developer/entrepreneur with a large scale idea that requires serious capital to get off the ground, you can't bootstrap. But for something that is effective at a small scale and can be built from the ground up, the timeline only shifts a small amount (so long as you pursue all marketing avenues available). I'm assuming that your friend evaluated the risks of fundraising and made a reasoned choice. I don't think it is fair to reason about his venture in hindsight.

ibrad 13y ago

A hundred tech companies are still an exception. Yes building an amazon type of business requires more than your savings, but it is not what most businesses are doing. Joel Spolsky made a very interesting post about it[1]. A lot of companies, that are clearly not going to be Amazon sized one day, are looking for investors just so they can make another bufferapp type of deal. We always list Twitter, Facebook, Google, and those hundreds you are refering to, but those are a handful compare to everything that is out there. [1]: http://www.joelonsoftware.com/articles/fog0000000056.html http://www.joelonsoftware.com/articles/fog0000000056.html