Bootstrapping

Bootstrapped companies grow slower but stay profitable from day one. VC-backed companies burn cash to grow fast and worry about profit later. Neither is better—it's about what you want to build. Why bootstrap: (1) Full ownership—no dilution, (2) Control—you make every decision, (3) Profitability focus from day one, (4) Exit optionally, not mandatory, (5) Build for customers, not investors. Why NOT to bootstrap: (1) Can't compete in winner-take-all markets against funded competitors, (2) Product requires heavy upfront investment (hardware, biotech), (3) Need to move extremely fast to capture market, (4) Personal finances can't support years of runway. Bootstrapped success stories: Mailchimp grew to $800M revenue without VC, sold for $12B. Basecamp, Atlassian, GitHub (initially), Spanx, GoPro (initially). These companies stayed profitable, grew at their own pace, and built generational wealth without dilution. The middle path: Many founders bootstrap to $1M+ ARR, then raise VC to scale faster. You've proven the business works, so you raise on better terms and keep more equity. This is increasingly common in SaaS. Bootstrapping challenges: (1) Slower growth means competitors can outpace you, (2) Requires actual paying customers from day one—can't afford long R&D phases, (3) Every dollar matters, forces tough tradeoffs, (4) Hiring is slower—you can't afford to overhire. The dirty secret: Most startups should bootstrap but raise VC because it's fashionable. If your business can be profitable at small scale, bootstrap. If you need $50M to prove the concept works, raise VC.

Tiny: acquired companies and grew to $500M+ in AUM, bootstrapped. ConvertKit: bootstrapped to $29M ARR before taking a small growth round. Gumroad: raised VC, burned out, downsized, went back to profitable bootstrapped model.