The alternatives, i.e. selling equity for capital, usually means the founders mitigate some of that risk. For example their salaries would not come completely from their own capital anymore.
I think that's important to keep in mind. Bootstrapping is not the optimal solution for everyone. If you fail, you pay dearly, especially in opportunity costs, but many also touch their savings or their families' money.
Also now that its running on its own, I also feel that I have less risk, because with a profitable company there is no requirement for growing a specific amount that investors demand or otherwise they take your control away.
Also, you may be confusing risk with outcome. Your outcome was positive. If your business had failed, at any point, you would have lost any benefit from the work you put in. It's also not quite fair to assume that the time you worked on that project is worth 0 Dollars.
Through contracting I make about 30% less than I did as a salaried employee, but I am immensely happier than when I was employed full time. Even if I wasn't bootstrapping a business, that tradeoff feels worthwhile to me.
In your situation, no, your opportunity cost from working on a side project is probably bigger than you think. First of all, I wasn't talking about the contracting/employment choice, so you need to compare the time you lose for contracting.
And then you need to differentiate between cost and risk. You sound like you are comfortable with the cost you are taking on (good for you, nothing wrong with that!). But when talking about the risk, you need to compare it to the possible outcome that your business completely fails.
That's what I am talking about when I say that bootstrapping means you carry the complete downside risk for the business.
I don't know what kind of risk appetite you have, or what percentage of your total net worth got tied up in your side business. So it's completely possible that this is a rational and beneficial choice. But it's not as easy as "I think it's worth it."
And people also forget about the upside risk of outside funding. Yes, your piece of the pie shrinks, but the pie also gets larger.
And again, I don't want to make people feel bad about their decisions, I just wanted to point out that risk management, with respect to their own personal capital, is something that start-up entrepreneurs need to think more about.
Sure, the capital injection helps grow quicker but many businesses could have been comfortably bringing in a few million dollars per year but end up dying because they were forced to grow too quickly.
No outside funding means the founders carry 100% of the risk. No amount or form of outside funding can increase that percentage (duh!).
And if you are putting in your time (with the associated opportunity cost), you should be asking yourself what kind of growth you are willing to accept in exchange, shouldn't you?
You don’t carry “all” the risk but your risk still goes up.
There are all sorts of crazy agreements one could think up, but basically if a funding agreement increases your downside risk, it's really not so much about the funding but rather about a fundamental change in the venture. Otherwise, why do it?
Of course you can enter an agreement where you increase the risk of the venture failing significantly. But that's not fundraising, and it's probably not smart, either. And the risk of staying small is sometimes underestimated.
If you enter into a funding agreement where you put in your own money, or a loan you personally guarantee, that would increase your downside risk. But it's also not fundraising, because it's your money.