Bootstrap Funding Compared to Vc Funding

Yesterday, Silvan Krähenbühl interviewed me for Swisspreneur at the Swiss Startup Days. We spoke about the pro's and con's of bootstrapping vs. fundraising, the Ava exit two years ago and the Swiss Startup Ecosystems view on Failure. Topics I have become very passionate about in the past two years and you'll hear me talk about more often. Here are the key insights regarding bootstrapping vs. venture funding: 1) There is no "better" way. But there is a better way for your idea. Both paths can be the right thing for an entrepreneur. It depends on the founders personal situation and on their idea. Some ideas are moonshot ideas (we see that a lot in healthcare, deeptech) and need funding, some others are actually harmed by too much investment too early. 2) The world needs bootstrapped role models Many young founders are led to believe that fundraising and startups are the same thing. We see very few bootstrapped role models, as the media gives them significantly less attention. Unfortunately, that can lead founders to go down the fundraise path when really, a boostrapped path would be better for them. (Shout-out to Jesse Pujji and Rand Fishkin who are both very vocal abut bootstrapped successes) 3) The founders role in a boostrapped org vs. a fundraised org is very different In the fundraised environment my role as founder and CEO shifted very quickly to "managing the company" aka: Hiring, Strategy, Fundraising, Investor Relations, Pretty Decks and I saw a steep learning curve from that. In the boostrapped environment now my role is much more "operating the company" aka: Running Operations, Sales, Finance and making sure we have a desk and a table for the team :) 4) Both are stressful for different reasons In a fundraised company you make promises to many people and have a larger team to be responsible for quicker. Things feel crazier, are more fast moving and less stable. The stress comes from meeting everyones very high expectations. In the bootstrapped environment things move a bit slower. You hire when you can afford it. But the stress comes from having your personal money on the line. 5) All or Nothing vs. Medium Fundraised companies are by design all or nothing moonshots. Generally, the investors will want you to win, and win big time. The old mantra is that investors expect at least a 10x return as only one out of 10 portfolio companies actually return money. A medium outcome is often viewed as failure, most founders don't see a payout after all liq. preferences on the captable. In the boostrapped world, a medium outcome can be life changing and fantastic. But a crazy outcome is very unlikely. 6) The new "in-between" The word on the block in Silicone Valley (and more and more in Europe) is the "in-between" model of founders taking on a first round but agreeing with their investors that it will be their last and only raise. Typically these investors are angles or family offices vs. VCs. What am I missing?

Venture capital has broken the way startups build businesses. And not for the better. Let’s break down the impact of VC funding on pricing. Say a fast-growing startup doing $7.5M in ARR raises $20M at a $100M valuation. To justify that valuation, the company needs to reach $20-25M in annual revenue, and it needs to do so in the next 18-24 months. There are only two ways to grow to that revenue target so quickly: grow the customer base or increase prices. While they’d love to do the former, it’s much easier to do the latter. Thus, the price hiking begins. As a result, I’ve noticed that VC-backed companies often charge significantly more than the competitive value of their products. Take Pylon and Unthread, for example. Both tools help you manage customer support channels with a unified inbox. Pylon charges about four times more than Unthread for the same functionality. For Chezie to use Pylon, we would have to pay a minimum of $970 ($139 x 7 seats) per month due to our need for multiple seats and specific integrations. But Unthread costs us $250 monthly for the same core functionality and unlimited seats. So why the price difference? Sure, Pylon might be 10% better than Unthread (although we use Unthread now, and it’s fantastic), but my guess is because Pylon recently raised $17M in a Series A, and the team knows they have to capture market share AND increase prices to grow into that valuation. But wait! There's more. Typeform and Tally are two products that help you create beautiful forms. Typeform has raised $187M to date and charges $99/month for up to 10,000 responses. Tally is 100% bootstrapped, offering unlimited responses for free—you only pay if you need to create something super customized. Sure, Typeform might be marginally better, but does that justify the massive price difference? Definitely not. With AI and no code, It's only getting easier and easier to make software. We’re going to see a lot of VC-backed companies who have priced well above their competitive value lose market share to companies who raise little-to-no VC and charge dramatically less for a similar product. Key takeaway - think hard about what taking VC money means. You don’t have to grow into a valuation if you don’t raise or if you raise at a realistic number. Prioritize sustainable growth over-inflated valuations, so that you can offer real value to your customers. 

“You can’t build a billion-dollar company without VC money.” Sure. Tell that to: → Mailchimp – Bootstrapped. Sold for $12B. → Basecamp – Profitable for two decades. → Spanx – Built solo. Sold a majority stake for $1.2B. → ConvertKit (now Kit) - is still bootstrapped as of 2025, $43M in ARR. These companies didn’t just “get lucky.” They mastered a different model, one most of the startup world still underestimates. Because building without venture capital forces a whole other level of focus and execution. And that shapes a different kind of founder. They learn how to: → Nail product-market fit without burning cash → Prioritize customer value over investor excitement → Build teams around function, not fluff → Track real performance, not vanity metrics → Design systems that scale intentionally → Make finance a tool for decision-making, not just reporting → Hold the line on cash—because you are the last line → Say no more often, and more decisively → Scale sustainably, not reactively → Operate as founder, CFO, COO, and strategist - all in one These aren’t just survival skills. They’re compounder skills. And while the world celebrates hypergrowth and 10-slide pitch decks… Bootstrapped founders build in silence, and win in the long run. Not every company needs VC to succeed. And more founders are starting to realize: That’s not a constraint. It’s a competitive advantage.

Last week I got a text from a famous VC who asked me to “tone down the ‘build a real business’ conversation.”  Why? Because all the bootstrapping Profitable Efficient Growth (PEG) narrative was catching on and fewer founders were interested in taking their money than 5 years ago. A lot of folks are realizing that there are more paths to growth and wealth creation than getting on the VC Merry Go Round that forces (often unnatural) hyper-growth in pursuit of a fabled IPO payout in 7-10 years. Venture Capital is one of the most humane most inspiring forms of capital that has ever been created. But as Josh Koppelman said it’s “jet fuel”.  And not every business is building a jet. This is particularly true in vertical SaaS where single-industry focused markets *might* create limited upside in enterprise valuation. This might be true in categories like construction, SMB contractors and professional services (eg roofers, HVAC repair, pool cleaning) or specialized franchise businesses.  We discussed this on Topline this past week and here’s where things shook out. PRO VC: If you truly believe you are working on a world changing idea, you will likely need VC to achieve true scale. This will likely be a horizontal market workflow solution that can eventually apply to a broad range of industries.  These businesses will typically have technical co-founder CEOs building true software where initial market feedback is so positive they feel the pull forward through massive amounts of organic word-of-mouth driven inbounds. PRO BOOTSTRAPPING: If, however, you are not quite sure you are working on a world changing idea but you are are working on something that has clear demonstrable value, consider bootstrapping. This will especially be true in vertical markets where the workflows will be difficult to extrapolate to new industries. And this will typically involve non-technical commercially-minded CEOs who can somewhat easily get a business to $5-10M in revenue but will struggle to scale beyond based on a lack of affordable top tier engineering talent.  One choice is not BETTER than the other. The reality is that almost all of the world changing companies of the last 30 years raised venture capital at some point. But founders and entrepreneurs have more options than they ever have had and there’s more than one way to skin the cat these days. Choose wisely. 

A bootstrapped SaaS just sold for $200M. No VC funding. No fancy marketing. No Silicon Valley office. Just pure product-led growth that turned into a $50M ARR business. Here's the untold story of Wingify's incredible journey: For the last 15 years, SaaS companies followed the same playbook: • Raise massive VC rounds • Burn cash for growth • Focus on expansion over profits But Wingify chose a different path. Here's what they did instead: It started in 2010 with a simple idea: Help businesses make better decisions with A/B testing. The twist? Instead of copying existing tools, they built the world's first visual editor for A/B testing. No code required. Just point and click. The results were immediate: • 1,000 beta users • 10 paid customers on day one • First enterprise deal within months • $1M revenue by 2011 All without a single dollar of outside funding. But they were just getting started: While competitors chased funding rounds, Wingify focused on innovation: • First to launch heatmaps (2010) • Pioneered visual editing (2011) • Integrated with Google Analytics (2012) • Built Bayesian statistics engine (2015) Each innovation drove organic growth. Think about what this means: When you're bootstrapped, you can't rely on fancy marketing. You can't outspend competitors. You can't hire hundreds of salespeople. You have to build something people actually want. The numbers tell the story: 2011: $1M ARR 2021: $25M ARR 2022: $30M ARR 2024: $50M ARR All while staying profitable. But there's an even bigger lesson here: You don't need: • Billions in funding • Hundreds of engineers • A Silicon Valley office Just: • A great product • Happy customers • Sustainable growth The playbook is about to change: Every SaaS founder studying Wingify will realize: • Product > Marketing • Profits > Growth • Sustainability > Scale The era of endless fundraising is ending. Here's what happens next: 1. More founders choose bootstrapping 2. Focus shifts to unit economics 3. Products win over marketing 4. Customers matter more than VCs But there's something even bigger happening: The acquisition shows that you can: • Build in India • Sell globally • Stay profitable • Exit big Without playing the VC game. The lesson? Sometimes having less means building more. Wingify proves you don't need: • Massive funding rounds • Fancy offices • Complex strategies Just a great product and the patience to grow sustainably.

VC money makes you soft. Starvation makes you dangerous. When you’re fat on funding, you buy tools before you have customers. You hire a head of growth before you’ve figured out how to sell. You burn $50K/month to "move fast" — and still move slow. When you’re broke? You write copy yourself. You ship at 2 a.m. You negotiate with your team over a $200/month SaaS subscription like it’s a damn Series A term sheet. I’ve done both. One feels like a campus startup showcase. The other feels like war. Starvation forces clarity. You learn which meetings actually move the needle. You stop chasing polish and start chasing purchase orders. You sell before you’re ready. You build what hurts the most — not what strokes your ego. We’re not loud. We’re focused. Dialed. Dangerous. And that’s how we’re building EasyAudit. So if you can bootstrap — even for 6 months — do it. It will make you sharp in ways VC money never will.

Unpopular opinion: VCs kill good companies. I’ve raised VC money and bootstrapped my own business. Here’s the dark side of venture capital that nobody talks about: the rush for money often becomes a death sentence for startups. VCs fuel a high-stakes race for growth at all costs Pushing founders to chase the next funding round instead of sustainable profits. 😱 The catch? If you don’t hit those sky-high targets, it’s 𝗴𝗮𝗺𝗲 𝗼𝘃𝗲𝗿: - NO next round, - NO runway, - just a swift end to what could have been a great company. And here’s the truth: Building a bootstrapped business with solid foundations isn’t just a safer path It’s often the most profitable one. When you bootstrap: 🔹 You focus on customers, 𝗻𝗼𝘁 𝗶𝗻𝘃𝗲𝘀𝘁𝗼𝗿𝘀. 🔹 Your growth is sustainable, 𝗻𝗼𝘁 𝗮𝗿𝘁𝗶𝗳𝗶𝗰𝗶𝗮𝗹. 🔹 You control your vision — 𝗻𝗼 𝘀𝘁𝗿𝗶𝗻𝗴𝘀 𝗮𝘁𝘁𝗮𝗰𝗵𝗲𝗱. In the long run, profitability beats hype every time. Bootstrapping might not make headlines, but it builds businesses that last. Founders, what’s your take, VC cash or bootstrapped freedom? _________________________ 👋 I’m Fabien, I’ve built 6 B2B SaaS companies. 📢 I share real, no-BS lessons on entrepreneurship, remote work, and company culture. 🔔 Follow me for more insights like this!

An unconventional reframe on venture capital that I think most founders should consider. Most founders assume the VC track is the only path. They set the goal of $1 billion dollars before they make $1 dollar. They meet with investors before they build anything. They have an outline of their Series A deck before they raise a seed. And here’s what happens: 🎢 They get stuck on the one-way roller coaster… …making one-way decisions that are in the best interest of their VCs, and not necessarily in the best interest of the company (or them personally). 💢 They fast-track growth (often without product-market fit) 💢 They reach for markets they have no business being in. 💢 They build products 2, 3 and 4… before product 1 really works. And of course, they need to raise more money to do all of this. I’ve met with 100s of these founders… …and most of them are miserable. 😥 They hate the business they’ve built. They have no agency. And there is no exit ramp. They’re trapped. If only they’d taken a different path to build their company. The early-stage bootstrapped path. This is the path we recommend for (most) founders. Here’s why: 👉 It forced you to get the fundamentals right. Solve a real problem. Build a real product. Get customers to pay you real money. The early-stage venture track lets you push all of these things into the background. 👉 It gives you real control. With no strings attached, you can build the product and business you want to run. Not the one that your VCs want you to build and sell. 👉 It still leaves venture capital as an option. VC money can be a powerful tool. The perfect time to take on venture money is when you are ACTUALLY ready to chase hyper growth. (ie. after you’ve found product-market fit) Qualtrics and Atlassian are perfect examples. They got to millions in revenue before taking on venture capital. ——— The takeaway for founders and potential founders: The venture track is AN OPTION for building your startup. Not necessarily THE OPTION. Think long and hard about the strings attached to this decision in the early days. Or don’t, and enjoy your ride on the one-way rollercoaster. #stratups #founders #venturecapital

Most companies shouldn’t raise venture capital. VC funding is one of the most overprescribed “solutions” in business today. For 90% of companies, bootstrapping is not just the safer path — it’s the smarter one. Here’s why: • 1. Ownership = optionality. When you own your company, you can sell, scale, pivot, or shut down on your terms. You’re not answering to a fund’s timeline, thesis shifts, or portfolio math. • 2. Pressure kills creativity. Venture money comes with growth-at-any-cost expectations. But real innovation usually needs patience, deep customer feedback loops, and space to think — not an artificial race to $100M ARR. • 3. Default alive beats default dead. Most VC-backed companies are “default dead”: if they stop raising, they die. Bootstrapped companies are “default alive”: they control their destiny. (And in a downturn, that matters a lot more than people realize.) • 4. Venture scale ≠ life-changing outcome. You don’t need a billion-dollar exit to transform your life. A $10M business with 80% ownership is often better than a $1B business where you own 2% and have no real say. ⸻ There are exceptions. If you’re building deep tech, global platforms, or you need upfront capital to break into a hard market, venture can be the right tool. But for most businesses — SaaS, services, consumer products, creative industries — the best move is simple: Get customers. Get profitable. Buy your freedom. Funding isn’t the prize. Freedom is. ⸻ Follow-up: I’m curious: if you’re building something today, are you leaning toward bootstrapping or raising? Why? #startups #founders #entrepreneurship #bootstrap #venturecapital #ownership

Bootstrapping vs. VC Funding. Which is Better for AI Startups? It depends - consultants and lawyers' favorite line! Let's start with an interesting fact about bootstrapped startups. They tend to last longer but also face natural limits on growth. You must be prepared to break through glass ceilings. IMHO, in AI, these ceilings typically occur at $2K, $10K, $50K, and $100K in monthly revenue. Less than 1% of bootstrapped companies cross the $10K monthly revenue mark. No one talks about these openly but based on my chat with other founders, they all privately feel this is the case. Bootstrapping looks attractive as you control your destiny and can potentially create multiple companies. In contrast, with venture capital (VC), you're limited to one company at a time. The advantage of VC is access to significant capital and networks. These networks provide mentorship, industry connections, and strategic guidance. However, a crucial question arises: Is your idea VC-ready? This typically means having the potential to become a $100 million or $500 million revenue company. Are you prepared for the "jet fuel" - a lot of money to rapidly explore the market? If not, it's better to “confirm” your product-market fit and confirm that this is the idea you want to work on for the next decade before raising external institutional money. What do I personally feel? In the current AI landscape, with significant uncertainty (especially from big tech) and fewer acquisitions, it's better to start small. Consider raising around $x00K from friends and family. Use that over a couple of years to confirm your passion for the idea and its potential. This approach allows you to determine if you're ready for venture capital. If not, continue bootstrapping. Nothing wrong, nothing right. Pace yourself and founder mental health is as important as financial runway. #startups #bootstrapping #venturecapital #funding #marketing