Startups rarely die in mid keystroke. So keep typing!
I have always loved this quote. Many a times, it has helped me overcome fears about the coming months by making sure that I keep churning out code. If you haven’t already, you should go ahead and read the whole list of essays by Paul Graham, the founder of Y-combinator, the factory line for startups.
One of his recent essays is called “A Fundraising Survival Guide“, and is quite descriptive and informative for startups trying to get funded, but some of the comments inside made me a little uncomfortable.
He writes
Bootstrapping sounds great in principle, but this apparently verdant territory is one from which few startups emerge alive. The mere fact that bootstrapped startups tend to be famous on that account should set off alarm bells. If it worked so well, it would be the norm.
[3] One VC who read this essay wrote:
“We try to avoid companies that got bootstrapped with consulting. It creates very bad behaviors/instincts that are hard to erase from a company’s culture.”
Now that is confusing.
The guys over at 37signals keep saying that bootstrapping is the way to go, and on the other hand this guy says the exact opposite. So then, what really is the truth. What should one be doing?
The answer I think is “It depends“. Twitter definitely needs funding, while 37signals definitely does not.
The answer lies in the heart of the startup. It depends on what does you startup want to do. If it would take you a lot of time before you can start making money, then you need some external money to keep clear the bills, but if you can find a way to start getting paid immediately, you are better off without giving out your equity.
Investors will tell you that you need funding, and bootstrappers will tell you that you need to keep the control, but all they are really doing is selling you their ideas of running startups. And this is why before you finally choose your action plan, you would need to find out which of the ideas is worth the time and effort, and then buy that.
I feel that Bootstrappers lose the flexibility to scale up (By getting Investors) while trying to keep control.
But this is a classic dilemma and thanks for the thought provoking post!
Ranjan, I wouldn’t like to generalize like that, because most of the ‘empires’ have really been bootstrapped to quite an extent.
But yes, since there are no wrong answers, this will always be one of the first questions any entrepreneur will have answer.
And thanks for dropping by
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