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- ♞ Why Bootstrapped Ventures are Winning!
What are they doing differently?
In today’s market, we are increasingly seeing bootstrapped ventures able to reach $5-10M. This was unheard of a few years ago, when most tech companies that reached $1-2M in revenues would start to search for venture funding to support their growth.
While AI and its ability to help scale systems are a significant part of the reason for this change, there are also characteristics of bootstrapped companies that don’t often translate to venture-backed companies, which are allowing them to succeed in an increasingly volatile economy.
Let’s discuss those priorities and why you should have them at the core of your business moving forward.
Doubling down on what is working - In bootstrapped companies where cash flow is king, when something is working, you keep doing it. This is not often true of venture-backed businesses, which are more concerned with optimization and scalability. This can cause them to miss out on immediate opportunities in the hopes of hitting a bigger jackpot in future. This is a risk you can take when you have venture funding but when that funding dries up, you are left with an unsustainable business model.
Customer acquisitions - Similar to the previous point, venture-backed companies prioritize scalable methods of customer acquisition. While there is nothing inherently wrong with this, it does mean that they don’t always explore the more scrappy, cost-efficient methods of customer acquisition. Those methods may be necessary to get the business up and running. It’s something YC always pushes as well, to do things that don’t scale early in your company’s life to get you going.
Ship and Iterate - VC-backed businesses often have a minimum quality standard to uphold with their products, especially if a big-name VC fund backs you. For smaller bootstrapped companies, the goal is to launch and then figure it out from there. This means that new features and changes are constantly being made to suit customers’ needs; it also means that instead of killing ideas in meetings, they get tested in the market. This can lead to unexpected results (both positive and negative.
Adhering to some of these principles, regardless of your business's stage, is vital for success. That being said, it is not easy once you rise to remain true to these principles. The reality is that once you raise your goalposts, they have shifted. You need to build a venture-scale business; investors won’t want a smaller business since they can’t realize a return on it. That means while many of these principles might make your company more successful, your investors would rather you take the 1 in 100 shot because they have 100 companies in their portfolio. For you, however, you risk it all without a backup plan. This can be punishing if it doesn’t work out.
Have you tried this strategy? |
Are you looking to grow your business? Here is how I can help:
📱 Book a Strategy Call to get 1:1 feedback on your pitch, pitch deck and/or fundraising strategy. (If you need general startup advice, then reply to this email, and I’ll let you know if/how I can help.)
Onwards and Upwards,
