Why entrepreneurs with previous bootstrapping experience make fantastic venture-backed founders.
There's never been a better time to be a good steward of venture capital.
Until Basewell, bootstrapping was all I knew.
My real estate venture, for example, was really bootstrapped. I’m talking about not being able to afford groceries or gas kind of bootstrapped. I’m talking about not being able to take clients out for drinks because I was under 21 and couldn’t afford the tab kind of bootstrapped. I’m talking about breaking down in my car because I didn’t know “how the hell I was going to do this” kind of bootstrapped.
Those years of fighting taught me drive, determination, and developed a sense of grit that’s unshakable. But not all bootstrapping is made equal.
There’s the bootstrapping that’s cute—mainly found on Twitter and TikTok. It’s the “daily hustle” videos of founders vlogging their seemingly perfect bootstrapped life where they rise before the sun, work out, eat perfectly, close a million-dollar deal with a big new client, and save a kitten—all before 7 AM. No investors, no rigorous schedule, no accountability. It’s like a Disney adaptation of what being a founder is like.
In contrast, real bootstrapping stems from deep desperation, experienced by founders who are willing to make things work despite their circumstances. Bootstrapping is most often a last resort, not the first option.
Yes, some incredible resources do exist to assist the bootstrapped entrepreneur: MicroAcquire, for example, is a marketplace I wish existed years ago, and robust manuals like Seth Godin’s The Bootstrapper Bible eliminate the noise and help bootstrapped founders build an enduring venture.
Even still, the “build something that works, or die” mentality drives every decision. It’s a pressure that never subsides… and as your success grows, the PTSD from building at day 0 will always live rent-free in your head. It’s the curse of the bootstrapped entrepreneur.
In a recent member newsletter, I wrote how “the market” is one of many factors killing startups right now, and I advocated for founders to embrace principled decision-making. Shipping profitable products, embracing customer feedback, learning from mistakes, adapting quickly, and being a good steward of your startup’s finances are all important characteristics that can get lost in a bear market.
Many founders know this, but bootstrapped founders usually feel this on a more intimate level—and definitely experience market highs and lows faster than those with venture backing. If the customer doesn’t like your product, venture dollars aren’t coming to save you. “Default alive” isn’t an option.
Orlando says it well in his recent tweet:
Markets where capital flows like wine get undisciplined founders drunk.
And that’s where we’ve landed. For many, sobering up has been difficult. Raising is off the table, customers are clenching their pocketbooks, and runways are getting awfully short. To the founder with previous bootstrapping experience, not having a golden parachute means the chaos of this year is just another day.
Venture markets are crashing and you can’t raise? Just another day.
Customers need to be convinced to buy your product? Just another day.
Talent is hard to hire and scared to commit? Just another day.
Your access to groups of people, companies, events, or markets has closed? Just another day.
Starting with nothing demands resourcefulness that’s only taught through doing the thing. This market rewards those who have the tenacity to push through, or who know what it’s like to fight back against seemingly insurmountable odds.
That’s why I believe founders who have previously bootstrapped make fantastic stewards of venture backing—especially in crazy markets like this one. Overcoming adversity to their startup is all they’ve known.
“Been here before. Just another day.”
Contrary to what TechCrunch articles would lead you to believe, most businesses start with a bootstrapped approach—not $5M in pre-seed funding. Those startups might go on to raise venture later, or they might follow in the footsteps of Profitwell (bootstrapped, sold to Paddle for $200M+) or Mailchimp (bootstrapped, sold to Intuit for $12B). Yet the narrative of options is not entirely true for all people: some founders never get the choice to raise, regardless of their intentions to do so or the health of their EBITDA.
It can actually be difficult for bootstrapped founders to get their foot in the door with investors. Often bootstrapping is the only option for those who lack network connections to VCs, or fall outside of the typical SF founder mold. Narratives are changing, but many investors still consider previous raise experience more important than having bootstrapped a successful company.
I believe both are important, and both should be equally considered.
True, knowing how to raise is vital if you want to capture a massive billion-dollar TAM. So is knowing how to manage marketing, compensation, sales pipelines, schedules, and more (and managing each in a way that bolsters profitable growth). Lessons of the latter are experienced by all who start ventures, but the pressure from those lessons falls deeply on the bootstrapped entrepreneur.
In addition, living in a remote-first, post-COVID world has shown that a lack of venture connections doesn’t determine the validity of the founder. Some funds have that ethos built into their DNA by focusing solely on under-represented founders. Others are using shifting market conditions as an opportunity to evaluate their pipelines, and support more founders that dream big and have experience building a healthy, profitable, enduring brand—regardless of the startup’s location.
Brian’s thread on this captures that sentiment perfectly:
A shift towards supporting founders (period) vs. blindly supporting a specific type of already in-network founder is one I’m excited to see (and one that’s long overdue). Crunchbase recently reported on this change in an article titled, “Why More VCs May Want To Back Your Bootstrapped Company.” Bottom line: founders with previous bootstrapping experience are desirable in poor markets.
So where do we go from here?
If you’re an investor, consider funding those who have bootstrapped previously. Recognize that what you’re funding is more than a story, it’s a person who can do what they’ve set out to do. If someone has been successful with zero outside capital or connections previously… why wouldn’t that success translate into something greater with your backing?
If you’re a founder raising with previous bootstrapping experience, get your story tight and your numbers straight. Eliminating options for investors to say “no” by leading with healthy revenues, high growth, and a big vision for the future is essential. You’ve bootstrapped before: you can likely do so again to craft a bulletproof narrative that investors can’t wait to back.
A bias against bootstrapping is a willingness to overlook great people because they don’t fit your preconceptions of what “founders” look like. After all, the world’s next great founder probably won’t come from a deep network of VCs or have an Ivy League degree.
Don’t miss that opportunity.
Founders with previous bootstrapping experience:
Are used to abrasive market conditions. 2022 is “just another day” in their world.
Know firsthand how to steward finances towards a profitable end goal.
Remember how to fight for what they’re building—not just hope and quit when things get tough.
Are worth backing, because the next great founder likely isn’t emerging from a deep network of VCs.
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