“Think of Bootstrapping as a Tool, Not as a Way of Life” and Other Perceptive Observations On Transitioning to the VC Path with MagicBell’s Co-Founder, Hana Mohan
If there’s a whiff of dogma in suggesting that writers ought to place their creations only in certain genres or mediums unless they concoct fictive alter egos, there’s something categorically cultish about the belief that founders who choose to bootstrap/raise VC should then forever tie their identities to those choices. In 2010, MagicBell’s co-founder and CEO, Hana Mohan (@unamashana), started her first SaaS venture (SupportBee) partly inspired by the idea of being “bootstrapped, profitable,...
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what a pointless title, obviously you can grow faster with VC money, that is the whole point of startups, hyper growth, the problem is that it is not sustainable
"I had realized that typical, high-growth SaaS businesses required front-loaded investments into the product, customer support, and other foundational functions. A solid base for future, compounding revenue growth."
Yup! This is what I found with my SaaS. Wanted to bootstrap but wasn’t getting anywhere, as soon as I got funding grew 220% in 6 months.
I think you raise some valid points, but I’d have to disagree that bootstrapping is getting harder. I’ve had three businesses in the last 7 years and bootstrapping is no harder now than it was when I first started. And getting funding in no way guarantees success so it shouldn’t be looked at in that way.
Yea I'd say VC gets you more money and resources earlier on but it'll bog you down long term. With VC soon a lot of your time as a founder actually goes to fundraising, talking to lawyers, talking to investors, and cultivating a story. When you could be focusing all that energy into the product and business that your building. I've seen this the hard way.
Bootstrapping Vs VC Funding is a false dichotomy. You are the founder & you can choose to decide when to do what with your own company.
If you are in a dilemma on how this choice affects your outcome and how you should choose a direction, i'd highly recommend reading this blog.
https://www.upekkha.io/blog/saas-startup-funding-value-saas
Isn't this just really obvious that taking £100's of thousands makes you grow quicker? 😂 and yeah if you're a good business person you can also make it still end up profitable and a healthy business.
I think the obvious main draw back is that each time you do take a chunk of cash you likely give up 20% or so of your business. If you're doing that right from seed then you can end up with a big company but only 5% of it. But yeah if that's what you're after then great.
It's the 'Do you want to be rich or king?' idea. Most people can't be both. So it's a choice. Bootstrap is more king path. VC is more rich path.
I personally am aiming to bootstrap through the seed stages to try to basically skip the first round or so of investment and have lots of good money coming in from other paths to make it not a dirty old boot'strap.
Then I will take a big investment of say many mills later on for a big valuation to give it all rocket fuel.
I would rather have 10% of something than 100% of nothing
yeah haha sure. If you set taking investment as guaranteed success and not taking investment as guaranteed closing down the startup then that's right.
I'd rather have 80% of a £50m business and control than a 5% of £200m biz. This is just us picking random numbers here really isn't it 😂
It's a spectrum. Not like you either just have to go all in or not.
I already have taken investment before for my first startup and am planning to for my 2nd but just at a later stage so that I can end up in a nice in-between of big scaled company that I still actually have control over.
good for you. But in this competive enviroment i would rather take investment at pre-seed stage and later "quick flip" it rather than bootstrap it for years. Why would i do hard work when i can achieve something much faster through smart work? I don't know why but people assume taking VC investment is easy. But the truth is if you dont have impressive background or traction then it can take months of hard work to get a term sheet.
Your first sentence, ok yeah if you want to go quicker then raise investment sooner. No argument it makes things go quicker 😁
Hard work vs smart work though is just you making an opinion on which is smart. Both are hard work anyway, as you literally say in your next sentence. One just gives you more financial capital but you lose a bigger chunk of the business. So it depends what you prefer. I already said I'm not anti-investment didn't I? It's not an argument about whether to do it or not. I'm just personally waiting longer as I want more of a king end result instead of just riches.
and yeah did I ever say it's easy to get VC either haha. but if anything that's more reason to be patient about it and a negative of chasing it.
Also, you've just said you've not raised investment. You're being quite argumentative telling me as if it's a fact what 'the truth' is of raising investment. Don't you think this is a bit wonky of a conversation? The person not having done it telling the person who has how things really are?
Making this into me vs you when it's not. I just disagree with your blanket statements like better to have 10% of something than 100% of nothing which is just a non-statement.
Yeah you are right. Actually I'm not arguing with you. You are saying right. It's just our own preferences.
You can be rich with bootstrap, it's just most people get it the wrong way round. They try to build a product when they have no money. Instead, they should be generating revenue from customers before building a product.
Yeah for sure. Totally agree. Sales is king! 🤑
But yeah the book just makes the point that it's helpful to be aware of which you prefer as it can help guide your decision making is all. As in whether money or control basically is higher.
I guess we should choose whichever way is better for "growth" as a founder.
Either bootstrapping or taking VC, as long as it can help you find the fit or lift up your business to the next level.
From my perspective it more is a question of necessity:
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I will never make that switch. Have worked with VCs a couple of times before and one must be willing to play that game on a long term basis. Goals of the founders and VCs are not always aligned and that could become a problem.
Case by case, you need to decide which way to take. For community driven SaaS businesses you do not need to backed by VC. But if you have a specific persona and can't reach them without paid marketing or any money-driven way, VC money will bring growth to your business with many other limitations. Don't forget, you are picking up a guy to your car and VCs will talk :)
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