Using a bootstrapped SaaS is less risky than a venture-backed SaaS
Next time someone says that using your bootstrapped SaaS is "risky", send them this.
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Next time someone says that using your bootstrapped SaaS is "risky", send them this.
If I was a VC, I would only invest in solid bootstrapped startups that need the money to accelerate sales and expansion. However, they usually invest in presentations recently with a convincing set of LOIs because they want more.
Cheers to this! Same here.
We can just ask Rob Walling at TinySeed how well this approach is going for them. They've invested in 60+ lean SaaS teams — many of which are solo entrepreneurs — are crushing it. I can't speak to their returns but I imagine they are meaningful.
A decent point in this post. VC-backed SaaS shut down somewhat frequently. But bootstrapped SaaS companies do too — we just don't see it in headlines.
Death isn't the only reason people shut down a project. Perhaps their life dramatically changes or they tire of it. Also, I think larger companies fear that a small company can't accommodate the scale of their needs over the long term.
It sounds nice and I want to believe this is true but I am not sure.
As a founder of a bootstrapped SaaS business called helloivy.co I always stayed away from taking investments cause I don't need the money and I would like to make sure the product is solid and has traction before I would ever take an investment (NOT the Silicon Valley way). However I do sometimes wonder where hello ivy would have been now with an investment, either huge or gone I guess :). The business is doing quite well so I can't complain and I am very happy that I choose to bootstrap! I like bootstrapping as you have 100% control over almost everything and less pressure of needing to make all your goals. If you're not a developer it's expensive to bootstrap a SaaS company unless one of your founders is a developer. I guess both have their advantages depending on the situation that you're in. I think most of the (successful) SaaS companies that you know actually have had an investment somewhere down the road...
How have you handled the "pressure" of raising funds? Something like that is always expected from a SaaS company - that's the nature of the business.
I'm sure based on your growth, you would have been offered multiple funding options, esp during the market scenario a few months back.
Good point the post makes. Wonder where the 30% came from?
Whilst I have not kept a list myself, I've seen SaaS products drastically change after acquisitions. Some SaaS products under new ownerships stop serving small customers altogether and focus on large enterprises. This is as much risk as shutdowns.
In terms of Bootstrapped SaaS, what I have noticed since 2004 is that bootstrapped does not mean the companies are operated by a single person.
As a bootstrapped SaaS founder, you can start building a team with revenues by hiring teammates. By doing this, you reduce the risk for your customers.
Until you have the revenue to hire talent, you can also bring on free talent from companies like https://skilledup.life. This is my latest tech startup.
I have also been building subscription-based tech products since 2004 with many failures and two Exits. I bootstrapped them all and continue to do so. The biggest issue I have had during all these years is the lack of capital to build teams.
I'm solving my own problem through SkilledUp Life. My team now includes 2 salaried staff and about 20+ Volunteers. https://skilledup.life/about.
I just changed pricing by adding further tiers and getting rid of tiers that were meant for slightly larger tech startups. See https://skilledup.life/pricing. I want to focus more and more on the underdog and become a reliable strategic partner for them, and not just a free talent provider.
Case study https://www.skilledup.life/the-unfair-advantage-gained-by-michael-hoeft-and-learnhall/
We are one solution. But there are many ways to de-risk a bootstrapped SaaS business.
All the best
Manoj
I actually thought venture backed start-ups failed way more often than 30 percent of the time. Other sources say closer to 70. Which makes it sound even more appealing to put your trust in a bootstrapped SaaS than something VC backed.
That's the worst stat I've seen in a while, wow....
Even if his numbers are correct (which I don't think), he's assuming the only way a bootstrapped company goes out of business is because the owner dies. Right..
I love this approach. Let people know that you're bootstrapped. Be proud of it. Don't try to pretend you're bigger than you are. Bootstrapping is a feature, not a bug!
I like this perspective!
By the way, looking for feedback on AnyGo, a tool to compare the cost of flying and driving to any U.S. city: https://www.anygo.info/
Dude, you gotta cool it on the self-promo. I see you copying and pasting this request all over the place, and it doesn't make me want to provide feedback. If you need feedback, my suggestion is to request it via a post.
Thanks for this. New to all this so appreciate the advice bro!
No problem 👍
There are a lot of reasons to bootstrap, but this isn't one of them. I really wish the author's argument made sense because I'm always rooting for bootstrappers... but it doesn't.
First off, both types of businesses shut down all the time for all kinds of reasons. Second, yes, you could, hypothetically, leave your failed product turned on and eat the hosting costs, etc. so that it never has to be turned off. But what is the benefit? And I'm pretty sure a dead VC-backed businesses could do the same.
I work with many bootstrappers in the WBE Space and I know that they really care about their users. I wish there were more indie-making companies out there's instead of those big behemoths that suck all of our money XD
Bit of a flawed reasoning (and those numbers, huh?). SaaS startups (venture backed or not) shuts down all the time. The big difference in outlooks is properly between solo-entrepreneurs and teams.
Really interesting point. The counter-point is also interesting that people might just change their priorities.
Yeah but also the maintenance costs of SaaS businesses is very low.
This comment was deleted 4 years ago.