I often think about how if more people understood the median cap table life cycle from Seed to Acquisition/Shut-down/IPO, there'd be half as many VC-funded companies and twice as many bootstrapped companies every year. Thank you for sharing your experience towards that goal.
Unless you're doing some niche b2b thing where you have no personal connections (in which case, why are you doing it at all?), the differential financial returns of going with VC are often negative, if not neutral. The main diff is you can "fail up" into the investor class if you prove your worth but the business goes sideways. But even that is a dissatisfying career for most founder-type people.
To whoever needs to read this: start your own company, avoid raising money.
I think a part of the problem is that if you've chosen a market where VCs do want to invest, and you decide not to take their money, someone else is going to take it, build and grow faster than you, and out-compete you into the ground.
Sure, maybe their longer-term trajectory is unsustainable growth and disappointing surprises for founders and employees, but by that point your bootstrapped company has already shut down.
But, by all means, find a market where there's scant VC money to be found, and you can probably bootstrap for quite some time without funding. And maybe you will eventually decide to take on funding, but instead of giving 60% of your company away to get it, you only have to give away 30%. Or you decide that giving away 60% is fine, in return for 10x as much investment as you might otherwise get at an earlier stage.
I know a non-zero number of people who have gone that route, and it's worked for them. If I were to start a company, I'd aim for this model myself. But I would have to be very careful choosing my product and market.
> I think a part of the problem is that if you've chosen a market where VCs do want to invest, and you decide not to take their money, someone else is going to take it, build and grow faster than you, and out-compete you into the ground.
This is in the talking points for the VC value prop, but to be honest when you get to the bottom of all the qualifiers and explore all the examples in depth, it's a flimsy defense.
Of course you're not going to bootstrap a company with large, up-front capital requirements. That removes the risk factor "choose a market where (smart) VCs invest". It means you're fishing in $100mm up to maybe $1B markets.
Now you're left competing against the (dumb) VCs who are spinning their wheels trying to win in a market where capital doesn't actually help you grow.
That means all you have to do is survive and grow YoY – which is the default state of a sensibly-run company – until the VC-funded people give up and move on, (which they are contractually bound to do within 10 years). And even if they stick around, there are very few markets that are winner-take-all.
I think sometimes we fall prey to the mentality of thinking that things are harder than they are. The investor-funded universe completely dominates tech media, so it's perhaps not surprising. But yeah, if you think critically about each of these steps, we aren't as dependent on them as meets the eye. 100x more the case if you have good technical and business skills on your founding team.
Unless you're doing some niche b2b thing where you have no personal connections (in which case, why are you doing it at all?), the differential financial returns of going with VC are often negative, if not neutral. The main diff is you can "fail up" into the investor class if you prove your worth but the business goes sideways. But even that is a dissatisfying career for most founder-type people.
To whoever needs to read this: start your own company, avoid raising money.