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Best of Bootstrapping: Why is Bootstrapping Important?

Posted on Friday, Jan 18th 2019

Over the last decade and more, I’ve had the privilege of working with a large number of bootstrapped entrepreneurs. These include self-financed companies and also modestly capitalized startups that operate in a capital-efficient manner applying the principles of bootstrapping. [You can review my Bootstrapping course on LinkedIn to recap these.]

For our Seed Capital series of podcasts and blog interviews, I’ve interviewed hundreds of investors, especially micro-VCs and angels who are playing and important role in the early stage game.


You may have read my recent piece, Bootstrapping to Exit, where I highlighted the importance of facilitating capital-efficient startups and smaller exits, including with small chunks of investment.

In working through the current landscape of our industry, a few trends become evident:

  1. A large percentage of VCs are chasing Unicorns
  2. Too much money chasing too few deals capable of delivering hyper growth bids up valuations
  3. Many Death by Overfunding tragedies have emerged
  4. Entrepreneurs are reacting, as Erin Griffith points out in her recent NY Times article: More Start-Ups Have an Unfamiliar Message for Venture Capitalists: Get Lost

My observation, having covered Bootstrapping for a dozen plus years, is that the industry doesn’t fully understand Bootstrapping.

No, Bootstrapping and Venture Capital are NOT necessarily mutually exclusive.

The savviest and most successful entrepreneurs have Bootstrapped First, Raised Money Later.

VCs LOVE to invest in bootstrapped startups that have validated and de-risked their ventures before institutional capital is invested.

There is nothing wrong with that approach, as long as entrepreneurs understand a few key principles:

  1. VCs love to come to the rescue of victory
  2. Do not go to VCs as beggars, go as kings
  3. Excess is not a requirement for success
  4. Entrepreneurship = Customers + Revenues + Profits; Financing and Exit are Optional
  5. Hypergrowth is not a natural phenomenon, but VCs demand it

I do not believe entrepreneurs should tell VCs to get lost.

I am going to write a weekly series on LinkedIn in which I will debunk many of the myths that exist on the topic.

Please subscribe to the series, and let us together advance the industry by merging the best of both worlds: Bootstrapping and Venture Capital.

 

This segment is a part in the series : Best of Bootstrapping


. Bootstrapping to an Exit
. Why is Bootstrapping Important?
. How Can You Play this Low-Probability Game Intelligently?
. Do NOT Go to VCs as Beggars - Go as Kings
. Excess is NOT Required for Success
. Bootstrap First and Raise Money Later
. Some Bootstrapping to Exit Case Studies
. The Buy Side of Bootstrapping to an Exit
. Blitzscaling vs. Bootstrapping
. Bootstrapping to Unicorns
. Cinedigm Acquires Bootstrapped 1Mby1M Company Future Today for $60 Million
. Mailchimp Bootstraps to $600M Revenue
. Bootstrapping from Arizona to $10 Million
. Bootstrapped Basecamp Executes a No Nonsense Strategy
. How Under30Experiences Bootstrapped to $5 Million
. Bootstrapping with a Paycheck
. How Algo.ai CEO Amjad Hussain Bootstrapped using Services from Michigan
. Seed Investors Who Like Bootstrapped Businesses
. How iHeartRaves CEO Bootstrapped a Niche e-Commerce Company to $20 Million
. Bootstrapping with Services
. How The Intern Group CEO David Lloyd Bootstrapped to $13 Million
. How Passageways CEO Paroon Chadha Bootstrapped from Indiana
. How SmartBuyGlasses CEO David Menning Bootstrapped to $50 Million
. Death by Overfunding
. How RainmakerForce CEO Mack Sundaram Bootstrapped Decisively to $5 Million+
. How FormAssembly CEO Bootstrapped a Virtual Company with a Paycheck
. TimeSlips CEO Mitch Russo Bootstrapped to Exit with Sage
. The VC-Entrepreneur Compensation Disbalance
. BioConnect CEO Bootstraps with Sophisticated Strategic Maneuvering
. Tremend CEO Marius Hanganu Bootstraps from Romania
. Gesture CEO Jim Alvarez Bootstraps to $10 Million
. SproutLoud CEO Bootstraps to $30 Million from Florida
. Tuft & Needle CEO Bootstraps to Over $100 Million
. Co-founders Bootstrap Linguamatics to Over $10M from the UK
. Ownership Matters
. Vainu Co-founder Mikko Honkanen Bootstraps from Finland
. Entrepreneur Couple Bootstraps to $10M from Colorado
. Power2Motivate CEO Bootstraps to $80M from Canada
. Financial DNA CEO Bootstraps to $10M+ from Australia
. Big Barker CEO Bootstraps a Niche E-commerce Brand
. PrecisionLender CEO Bootstraps to Over $10M from North Carolina
. Master Bootstrappers with Over $1B in Exits
. Ultra Mobile Founder Bootstraps to Over $100 Million
. Bootstrapping a Two-Sided Marketplace to $10M
. Can You Bootstrap a Virtual Company to Over $5 Million?
. Capital Efficient Entrepreneurs Turn $1M into $80M
. Discussing the Journey Through Failure to Success

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