Many of you may not know this, but Kinsta is proud to call itself a bootstrapping company. This means that we have never taken outside funding from venture capitalists or third-party investors, unlike some of our competitors. We appreciate what venture capitalists have to offer, and there are undoubtedly many world-class solutions and startups that wouldn’t exist without their help. But there are also pros and cons to going this route. So, today we want to dive into eight benefits of not being a VC-funded company, and how you can still build a successful, profitable business. How? By focusing on providing real value to your customers and building a lean startup
Bootstrapping is not that risky
Of course, this can be argued both ways. But we can all agree that the world of startups and VC is cutthroat, fierce, and highly competitive. Not many companies succeed, so the choice of whether or not to accept VC money is something
any business owner should consider very
carefully. Some of you are probably familiar with HBO’s Silicon Valley, and while it is a comedy, Neil Patel did a great post on 10 lessons digital
marketing professionals can learn from the series.
A lot of what they touch on is way over korea email list the top, but there is some Not Going the VC wisdom to be gleaned from the show.
Simply put, if you choose to throw investors
into the mix, this can increase risk as they expect to see a high return within a certain timeframe. Whether this comes from an exit, IPO, or acquisition. You need to be able to scale quickly and pivot when needed . We’re not saying all
investments from VCs are bad, but there can be a lot of pressure and issues associated with accepting outside funding. VCs give you money to get a better return on their investment, and that’s usually the main factor that drives them. They may or may not care about your product. What they need is for the product to be successful. Here are just a few stats to keep in mind:
- According to some estimates, nearly 90% of startups fail . That’s right, only 1/10 companies make it.
- Ghosh estimates that 70 to 75 percent how data can boost your sales on whatsapp of venture-backed startups fail to return the money investors put in, and of those, more than half don’t return anything.
- According to a study by CB Insights , only 22% achieved a sale or IPO, and 1 percent reached a value of $1 billion.
Many companies you’ve probably never
heard of, like Sprig , successfully raised funding but were unable to properly scale their business model and ended up going under. Or popular ones like Jawbone, which pioneered wearable devices but is now unable to pay suppliers Not denmark business directory Going the VC after receiving $1 billion in venture capital funding. Ironically, even as we wrote this blog post, we received an email about the Filament product by ShareThis being discontinued (as seen below). Many of you have probably received similar emails about companies and products that one day are doing well, and the next they just disappeared. Remember, just because a company received funding, it doesn’t always mean they are successful or will survive.
The opposite of this can also be argued,
where bootstrapping might be the riskier
move, as you are spending the money on self-funding rather than growing. In most cases, taking VC money means you are spreading the risk across multiple VCs and are not “as” responsible if the company fails. Dan Norris, a successful entrepreneur who sold WP Curve to GoDaddy in 2016, also makes a great counterargument , stating: