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Comment by byoung2 | Hacker News Reader

It is validation that (in theory) someone has peeked behind the curtain and done some due diligence on the startup and put money on the line as a bet that the company has a chance to be a success. Compare that to some other startup that was unable to get any investors.

That said, I would rather be a bootstrapped startup with revenue than one that raised a lot of money.

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The problem with bootstrapping is that eventually you'll hit an inflection point where the viability of the business model starts becoming visible. At that point you'll most likely start attracting competition. Unless it's a niche a business with a small TAM, your competitors will most likely raise VC funding to throw cash at hyper growth in a way you can't while staying cash flow disciplined.

In today's environment VC capital is nearly ubiquitous. So you have to assume that sooner or later you'll run up against VC-funded competitors. If you don't have a game plan to survive as a bootstrapped business when that day comes, then you pretty much have to raise VC funding.

Hypergrowth is really a B2C thing. You don't really get hyper-growth for B2B with capital.

For example, Microsoft has all the cash in the world, but it took ages for Windows server or MSSql to gain significant market share.

Oracle grew "slowly" in a bootstrapped kind of way, selling expensive product and so on. Despite the "hyper growth" of startups (mysql?) oracle is still a gold standard for databases (as determined by mindshare in companies.)

Yes there are VC winners, but as we know most VC companies are losers. Having a VC compeditor is fine, they burn hot, create buzz for your market space, validate your product existance, and then typically flame out, leaving market demand, and lots of trained experienced people to employ.

Bootstrapping is indeed a long hard road, with no easy riches, and again most companies will fail, but if you look around pretty much every company that exists in the world (outside tech) was bootstrapped [1], and even most companies inside tech were bootstrapped.

[1] I'm defining bootstrapped here as no-Vc-money. Bootstrapped companies typically have some small amount of seed money to start, and require a large time investment.

It's not obvious that VC funding helps your long term survival, though. It's a loan, and it has to be paid back at some time, often in ways that are detrimental in the longer term. "Hypergrowth" is mostly a myth anyway: slow and steady will win any race.

VC capital is useful assuming it's a winner-takes-all / capital-intensive market, but many markets are not, in which case optimizing for $ raised is actually a distraction

Example: Delicious was sold to bootstrapped competitor, Pinboard for only $35K. Pinboard is still around to this day

https://www.productlessons.xyz/article/pinboard-delicious-fa...

Linus (Tech Tips) has a good video about why external investment is useful: https://www.youtube.com/watch?v=LSxbc1IN9Gg , but he's talking about a hardware company, which is probably different to a software one. Skip to around 5:00 to get to topic.

> The problem with bootstrapping is that eventually you'll hit an inflection point where the viability of the business model starts becoming visible. At that point you'll most likely start attracting competition. Unless it's a niche a business with a small TAM, your competitors will most likely raise VC funding to throw cash at hyper growth in a way you can't while staying cash flow disciplined.

You can choose to take investment then, but it will be on much better terms than your competitors get. It's likely that you'll be able to raise more with less dilution.

Or, you can sell.

bootstrapping sounds cool and i’ve done that for many years. at some point you need money to grow because hiring people is super expensive and/or risky and marketing is not free either. so if you cannot generate enough cash to pay for that you are stuck. you are then basically still juggling all the work yourself perhaps with your cofounder and no investor will touch you because they think you are weird or don’t want to work with people even though the business is valid and the potential is huge given a investment. most investors are not very smart, have little operating experience and are not very good at listening. looking back i would never start a company again with my own money as the journey is brutal. i would rather have an investor on board, be able to hire people and pay myself rather than being broke for many years and working myself to death.

Imagine trying to bootstrap a semiconductor or EV company. Or a rocket company.

A semiconductor or EV company is not borrowing to chase "hyper growth", though. They need that money to literally set up shop.

setting up shop is not enough. sooner or later you need to pay for marketing which costs a lot of money. all this worth of mouth viral shit is BS IMHO.

Having worked for a semiconductor startup (Transmeta) that raised $500-ish million, I can assure you they spent plenty on marketing.

i am in the hardware business, so pretty close

I mean companies like MailChimp became a billion dollar company without any of that. I think it can still work but most people have blinders on.

not sure how bootstrapping works today, marketing is really expensive. i don’t believe organic SEO works anymore. so you need to buy ads which is $$$$$.

not really just look at canny.io https://twitter.com/sarahhum/status/1461378442256072712

not sure what I'm looking at. Do you mean that canny is an example of a startup that "made it" without spending money on marketing? or do you mean that I should use canny for marketing?

If it's the former, how do you know they did not spend money on marketing and that their user base grew "magically" just because the product is great?

also, 9 person team right from day 0 without funding. I wonder how that happened.

people create great products all the time that get no traction.

they are an example of "bootstrapping works".

the founders created enough revenue to slowly hire that team. they didn't have that from day 0.

again, this is how actual real sustainable businesses are created. they can raise money now if they want, not the ones with 0 revenue.

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