Sometimes Bootstrapped is Better

I’ve had this post bouncing around my head for a little while now, but I’d been reluctant to write it for two reasons: First, as the founder of a bootstrapped start up, I’m probably (definitely) biased. And second, I’m probably going to ruffle some feathers by voicing this opinion. But then, what is life without a little controversy?

A Tale of two Start ups

I’m going to describe two different start up companies, think about which you’d be more likely to trust, and therefore become a customer of.

Bootstrapped Start Up

  • Has one or two founders, and no employees
  • Works out of a founder’s spare room, or maybe a co-working space
  • Has a few thousand in the bank
  • Has no investors or outside share holders

Funded Start Up

  • Has around 100 employees, including a full time chef
  • Works from a fancy office in Silicon Valley
  • Just closed $50 million series B funding found
  • Has a few million in the bank

Chances are you’re more likely to trust the Funded Start Up, a sensible choice. Techcrunch described them as ‘disruptive’. The Bootstrapped Start Up hasn’t even been mentioned in Techcrunch.

However, there are two sides two every story, so I’ve described the same two companies from a different perspective below:

Bootstrapped Start Up

  • Keeps overheads low, and doesn’t blow money on extravagance
  • Turns a modest, but steadily growing profit
  • Has no board or investors, so their customers are their priority
  • Would never agree to having their product killed off in an ‘acquihire’

Funded Start Up

  • Burning through money, and will need more investment before they even sniff profit
  • Has a legal obligation to their shareholders, so their customers come second
  • Looking for that ‘billion dollar exit’, so their investors can see a return on investment
  • Once that exit comes, their product will most likely be killed. If you’re lucky you’ll get 7 days to export your data.

The Funded Start Up isn’t looking so hot now. I know I’d rather sign up to the Bootstrapped Start Up.

Sadly it’s an all too common story - start up gets acquired, promises nothing will change, and then kills their product - check out Our Incredible Journey - a single topic blog dedicated to Start Ups that have done just this.

I’m sure it’s not always this straight forward, and there are probably Bootstrapped Start Ups that have been acquihired and killed, and I’m sure there are Funded Start Ups that have rejected buy outs, and carried on serving their customers.

I’m not saying don’t sign up with a company just because they’re funded. I’m merely saying that there may be a smaller, bootstrapped alternative more suited to your needs. Chances are you haven’t heard of this wonderful Bootstrapped company, because all the main Tech Blogs seem to turn a bit of blind eye to genuinely exciting bootstrapped start ups, in favour of yet another post about how some Uber for Jet Skis just raised $100M.

- Matt Bearman