More and more startups are flaunting their succes, not by stating their revenue, but by proudly proclaiming how much money they raised. But last few years have taught us that raising money is easy, building a sustainable business model and revenue stream is a lot harder.
Everybody seems to be chasing the VC money and figure out the business model and that is why we did the exact opposite at Iamb&b. Taking money from investors is tempting and could accelerate you company but we think bootstrapping has it's advantages.
1. When you don't have a lot of cash, you have to make it, quick
Seems like an open door but the thought of not having enough to survive makes your company very creative. And you will find new ways to get the best out of the resources that you have.
2. Money makes lazy
It's comfortable to sleep on a pile of cash, but it's harder to spend it wisely. With a great cash reserve it's tempting to go for the easy route. Before you know you've spend your cash on acquisition so your growth numbers are impressing but not sustainable.
3. Before you run, walk
With an investor you can start running right away. But often it's better to walk first and determine in what direction you want to run. When you go fast with VC money and you find out you went in the wrong direction, it's very hard to pivot, while bootstrapped companies can itterate a lot easier in early stages.
4. Keep control of you company
For our company it was crucial to keep control of the company in the early days and it was a huge benefit that we didn't have to talk to investors. We could build the company the way we believed would be a succes. That gave iamb&b a strong foundation and a better position than some of our competitors. It's also nice to have a simple cap table when you try to raise growth money in later stages.
Ofcourse it's hard to bootstrap, you have to put in the extra hours. You will earn a lot less than your early employees, but you can grow your company the way you think is right, you're forced to be creative, and to be successful. And last but not least you can easily fix you mistakes since your mistakes will be a lot smaller if you don't bet tons of euro's on it. When you've build your sustainable business and you know how to scale you will have a clean cap table and you're ready for investors to accelerate your succes!