December 12, 2016

[Video] Which is better: Bootstrapping or raising capital? – Bobby’s Minute, ep. 76

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It really depends on what kind of business you want to run.

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Is bootstrapping better than raising capital? Well, it really depends on the type of business you want. If you want a lifestyle business, then bootstrapping is the way to go. If you want a high-growth business, you can try and do it by bootstrapping, but chances are you’re going to need a lot of money, faster than you can generate revenues.

So, if you want a high-growth startup, you’ll need investment. Most of the companies try to do a hybrid model. They usually bootstrap the early stage and then they raise capital at a later stage, because the valuation is better. We’ve done that with Mavenhut.

The biggest company that I know of that that’s done that is Evernote. I think they bootstrapped the initial stages and they got a small investment of a half-a-million dollars and then they raised the bigger investments. So, it really depends on the business model that you want.

If you want a business that you want to leave to your kids, then you probably don’t want to get investment from an outside source, but if you want to have a high-growth startup a company that can keep the revenues up with their growth, you need an investment, because, otherwise at some point, you run out of money.

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