What works for you (Bootstrapping or VC)

Choosing to go with venture capital or bootstrapping is a question most people face at different stages of their business

While bootstrapping has worked extremely well for me, so far, I would not advise it to every other founder. Going with bootstrapping or venture capital depends on the size of your market, opportunities for growth and whether you have identified a successful channel.

Bootstrapping

Bootstrapping works best when you have product market fit early and your product has a very niche market. The competition must also be considered because that determines your spending. The visible circumstances must also ensure that the founder and the team can sustain the business until positive cashflow is established and profits realised.

Venture Capital

Venture capital works better when even the initial creation of the product will require big investment that the founder does not have – this includes as well the marketing investment needed.

A known venture capital can be a strategic investment, bringing in a lot more than just money. This includes mentorship, access to other big companies and clients and credibility to your company – this makes it easier to hire better talent and speed up growth growth.

The negatives can include a lack of flexibility in pivoting your business based on circumstances and the time and effort spent keeping investors on board with your decisions. The excess money can also be a distraction.

My recommendation

is not to write off venture capital option. Even if you are bootstrapping your company or start up and earning revenues, you still may be missing out on much bigger potential.

Conclusion

if you are taking in external investments, take smart money where you get a lot more than just money. But remember that investments without an actual plan may lead to not needed expenditure, early dilution of your shares and distraction from an existing successful operation.

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