What is the best way to do a start-up: VC-funded or bootstrapped? There is no distinct answer to this question. You should follow the path that fits your goals for your company.
For us, that path is bootstrapping.
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Accepting VC funding may mean compromising the soul of your company. The primary goal shifts from building the company of your dreams to building a company that can be sold. For an open-source project like ours, it might mean diverting a focus from the collaborative and community-driven nature of open-source and potentially leading to decisions prioritizing investors’ interest over the project’s original ethos.
By bootstrapping, we are playing the long game. We can nurture our open-source product patiently, allowing it to grow organically. This lean approach gives us the time to refine our product and carefully respond to the challenges we face.
At some point, a VC-backed company will start seeking for additional funding, a process that may require founders to dedicate a substantial portion of their time to pursuing new investors. In addition to this, there are meetings, reports, and audits required by current investors. This valuable time could have been better spent talking to the customers and improving the product.
Bootstrapping helps us to prioritize the needs of our customers. We can invest time in understanding their pain points and their aspirations. This deep understanding allows us to develop software that genuinely resonates with the users. VC-backed companies usually need to focus heavily on acquiring new customers to sustain rapid growth - thus making the existing customers happy becomes less of a priority.
Bootstrapping encourages financial discipline. We learn to operate efficiently, optimizing every resource at our disposal. This disciple not only ensures the sustainability of our venture but also hones our ability to adapt and thrive in challenging circumstances, fostering resilience within our organization.
Think of it like this: bootstrapping is like being born into a family with limited resources where you must be smart, learn resilience, and steadily achieve success. Whereas VC funding is like being born into wealth, offering abundant resources that can lead to remarkable success if managed wisely or spectacular failure if misused.