Ask HN: Is it okay to just bootstrap it, even when VCs are knocking?

[rainbowtroutz]

I run a small, bootstrapped SaaS making 15K MRR or so. It's the most money I've ever made, in a domain I'm passionate about. I don't come from means or have a prestigious background; I feel like much of my success has just been luck and grit. I'm not a great business person, but I care deeply about product, development, and my customers.

I am sometimes contacted by eager megacorp M&A departments and VC funds, but... Is it weird that I don't want to do any of that?

I'm enjoying the lifestyle of "solve client's problem, client pays me money, innovate, iterate". It probably won't last forever, but it's simple and it feels authentic. The megacorps and VCs I've spoken to want to turn up the heat and take the business to the moon, planet-scale growth or self-destruct---I don't think that's what I want. I'm sure my potential acquirers or VC-funded competitors will build it with or without me eventually but... I don't think I give a shit.

Am I being a weirdo? Some of my more "Silicon Valley"-type friends think I'm nuts.

[null0pointer]

Congratulations on finding success and satisfaction in your work. I hope to one day find the same. Personally, I think you should keep doing what you’re doing. If you accept VC money you are now beholden to your shareholders and are no longer in control of your business. The degree of autonomy you have, the quality of your product, and the satisfaction you derive from your work will all surely suffer as a result. It’s a deal with the devil and frankly, were I running a business, I would stay away.

PS. These are merely the opinions of someone with no experience operating a business.

[dolmen]

VC money implies that the VC will usually want an exit in 5 years (or less). With VC money clock is running. That's not what you want if you really care about your product.

[abrookewood]

I'd agree, although selling the business outright (or retaining a small percentage) and then moving on to something else would allow you to try and repeat the success (which admittedly you may never be able to), but without any financial concerns.

[cm277]

I've done both. Bootstrapped a business to >$10m and (now) running a VC-backed firm. The models are different because the markets the two companies operate in are different. I see VC money as getting steroids in a competitive sport (not speaking from experience on that one...): it will save time, it will probably affect your health, but if you are indeed competing in sport, and other competitors are doing it, you don't have much choice.

So, I would advise you to look around you: what is your market? is it that highly competitive? can you still be in that market without competing (e.g. a highly fragmented market)? do you want to compete and can you avoid it?

Also keep this in mind: a VC-firm is meant to exit, if not immediately, then eventually. But, a bootstrapped firm also has to exit at some point too: you'll either have to sell it (maybe at a loss), shut it down, or pass it down (death comes for us all). Are you willing to do any of these? that's part of the answer to "do you want to compete?" above...

[caseyf]

> But, a bootstrapped firm also has to exit at some point too: you'll either have to sell it (maybe at a loss), shut it down, or pass it down (death comes for us all). Are you willing to do any of these?

highlighting this because I think it's important to think about where you are headed and what your plan is

[jossclimb]

> it will probably affect your health

Is it really that bad? I hear mixed views here.

[gkanai]

Building a bootstrapped business (i.e. NOT taking venture capital) is a rare skill. I would keep on building without outside capital if you can continue to build growth. If you hit a ceiling (without growth) then you may want to consider looking for/accepting outside capital.

As soon as you accept VC funding, there are basically 3 outcomes for your company. Getting acquired, going public (if that's an option where you are) or going bankrupt.

If you can keep growing without VC funding, I'd keep doing that.

[mik3y]

Good advice here.

> If you hit a ceiling (without growth) then you may want to consider looking for/accepting outside capital.

One other option at this point is to sell the whole business. For bootstrappers allergic to VC or lacking the drive/skill to scale further/faster, can be a nice outcome.

Seems to be a growing number of firms specializing in small saas acquisitions too (Tiny Capital comes to mind - no affiliation).

[tluyben2]

But if you get far enough, you can also contemplate a bank loan or loaning from a private person. I would not want to give away % if there is healthy income in the company and no drive to go nuclear (just healthy growth, which isn't 100%+/year as VC demand).

[conanbatt]

> Building a bootstrapped business (i.e. NOT taking venture capital) is a rare skill.

It is VC companies that are rare - the vast majority of businesses of any kind - and also internet businesses - are bootstrapped.

[icedchai]

The majority of small businesses are boot strapped. Only inside the tech bubble is it a rare skill.

[marcus_holmes]

or the fourth option of having your business taken away from you because of politics and watch some VC-approved idiot destroy it.

[mik3y]

I’m doing the same (small, bootstrapped SaaS, 10k MRR), previously leading tech from seed->C at a VC startup. It’s definitely okay to stay bootstrapped!

Main question to ask is whether you have considered the overall potential threats to the business, and what you’re trading off against by not taking VC; and if you are comfortable with those risks and tradeoffs.

There’s no universal answer, but there are better answers depending on the business / those risks. For example if your business is at increasing risk of a better-funded competitor eating your lunch, a bigger war chest might be prudent.

Keep in mind that there are a substantial set of skills you will need to develop, and responsibilities you will need to make time for, when taking VC investment. Not necessarily a negative, and for me it was desirable. Fundraising, managing investors (eg updating the board quarterly), hiring faster, and scaling the product faster. I’m hand waving here, but as you’ve guessed it’s likely not just take money and keep on operating exactly the same way. Big checks will come with certain expectations, and meeting them can dramatically change the culture and lifestyle you’re trying to achieve.

Lastly, there are ~boutique VC firms out there that specialize in smaller SaaS with good trajectory. The VC that is knocking may be the wrong match for your goals, but it’s OK to shop around a little.

Quick thoughts but feel free to find/dm me if you’d like any addl advice or anecdata. And, congrats!

[buf]

I'm a solo dev doing $700k yearly across two saas products. I'm also the founding engineer at Reforge (e.g. I've done the VC game from A16Z).

There are two things I look at when raising VC.

1. What's the TAM of my product and will a capital injection get me there faster?

2. Do I actually want to raise capital or do I want to work at my own pace?

The last couple of years (after Reforge), I've just been working at my own pace -- healing from my last VC run.

[popcorncowboy]

> healing from my last VC run

@rainbowtroutz pay attention to this line.

[kennxfl]

>2. Do I actually want to raise capital or do I want to work at my own pace?

Haven't VC-backed companies crushed small developers in niche markets who refused to scale? In most instances

[jimnotgym]

Point 2 is very important. Do you even need more capital? What would you do with it if you had it? If you are sat there frustrated that your product could be a game changer with just a few million dollars more capital then VC's are worth considering. If you don't need the capital then why share equity!

[Sealy]

Success to you is for you to define. Don't fall into the trap of VC funding because its all you read on HN or Techcrunch. What you have built is your baby so don't let anyone else tell you what you should be doing. It sounds like you have so much meaning and purpose in the company you have. If (and it sounds like) you don't want the vc money, then that is the right decision for you.

[tempestn]

Given that you're enjoying what you're doing, you're making decent money, and you have a path to scale, personally I would (and did) do exactly the same as you. Once you take VC money you're in a completely different situation, where you need to grow fast to show them a return. Also, you need to grow much more to get the same return for yourself than you would if you just bootstrapped. If you want to become a billionaire (or hundred-millionaire), then yeah, you should take VC money. But if you just want to make a comfortable living and ultimately achieve financial freedom, I'm not even sure VC money improves your odds. And it definitely comes with a lot of added obligation and stress.

That said, I've never actually taken investment, so I can't speak from personal experience on that side.

[SideburnsOfDoom]

> Once you take VC money you're in a completely different situation, where you need to grow fast to show them a return.

This. The VC model is to turn the business into a gamble: grow huge, or die trying - "planet-scale growth or self-destruct". (The third outcome, "get acquired" is a wash) They an afford to lose that gamble the majority of the time, because the minority of big wins make up for it. They do it in parallel.

But for the business owner, it's just one roll of the dice. A single shot at a time.

You don't seem to want this gamble. Good for you. Tell them politely that this doesn't suit your plans at this time.

[spaceman_2020]

I can tell from your post that you will absolutely hate ceding control to a VC

I would recommend finding a co-founder who has similar ideals but can handle the parts you don’t like doing, and has business experience. You’ll get much further without losing real control

[serial_dev]

Why do you recommend to bring the person in as a co-founder? I'm not sure if I was OP (a person enjoying solving customer problems without the pressure of going global scale), I'd like to give up so much power to someone I barely know.

Would you recommend against bringing in the business person as an employee, or as a contractor? A CEO for hire? Or maybe someone who can help with all kinds of operational stuff?

It seems like to MRR is pretty good and the project could afford one or two full time employees relatively easily (if you hire outside of the expensive tech hubs such as SV, NYC, Austin, Seattle).

[teh_klev]

> I would recommend finding a co-founder who has similar ideals but can handle the parts you don’t like doing, and has business experience

Why does this need to be a co-founder? You can hire people as employees to do the daily "business" grunt work.

[im_down_w_otp]

VC-backed CEO here, and I concur with this 1,000%.

[foglorn]

I worked for a startup that had bootstrapped but eventually received VC funding. The culture change was palpable, which I can only attribute to influence from the VCs. Everything became about growth, growth, growth - which really sucked the enjoyment out the work. I and several others ended up quitting.

If you're satisfied with being paid to solve clients' problems - which is a very common and in my opinion positive mindset, whether one is a business owner or an employee - then if I were you, I'd just stick with that. You've already achieved something to be very proud of!

It sounds like your "Silicon Valley" type friends have ideologically bought in to a pipedream. Please be true to yourself and your own beliefs and try not to succumb to peer pressure, is my advice.

[nottorp]

An old article by Joel Spolsky talking about this exact decision:

https://www.joelonsoftware.com/2000/05/12/strategy-letter-i-...

Organic growth vs throwing investor money at every problem.

Juicy quote: "Still can’t decide? There are other things to consider. Think of your personal values."

[dasil003]

I would say trust your instincts on this one. VC absolutely comes with strings attached, and those strings can easily lead to worse outcomes for both you and your customers.

Of course VC has its place, and some things are better off targeting massive scale from the beginning, but it does preclude a lot of good ideas just based on the economics. Given the scalability of software, running leaner can enable a wider variety of products that deserve a place in the world. If you want to split the difference with some funding you could consider https://tinyseed.com/.

[OJFord]

> It probably won't last forever, but it's simple and it feels authentic.

(Inexperienced armchair take:) it's more likely to last 'forever' (which I take to mean 'to retirement'/'as long as you want it to'/etc.) than taking investment/being acquired. Sure that could lead to lasting 'forever' on a bigger scale (as a more stable bigger company, or a longer 'forever'), but at a much lower probability.

I don't think you're weird - I'd love to be in your shoes in this regard. Can't say for sure I'd have the stomach to turn down cash offers of course, but the VC route has never been a dream/had the appeal for me it obviously does to many. I think perhaps because I'm not so interested in 'having a successful company' for its own sake, I wouldn't want to have to 'pivot' for example, I'd rather build something I care about, and the business side would be just doing the best I could to support that; maybe that would be a large cash injection in exchange for equity, but you don't mention any massive expensive changes you want/need to make. (That sounds pretty stupid and obvious when I write it out, but it's definitely a lot more of a traditional approach than taken by most that would use the term 'startup', or really the vast majority of new software/genuine tech companies.)

[matt_s]

Depending on the market and competition there may be paths where it doesn't last forever or it gets into a steady state business.

I suspect what happens to a lot of bootstrapped SaaS companies as they grow is the founder(s) have to take on the CxO roles and then aren't in the trenches doing the actual work. Those roles don't sound fun to me. I wonder if the fun part is the bootstrapping to where VC come knocking on the door? If that is the case then taking on VC might work to take some money off the table but the other option of selling the entire business off could work too.

[dspillett]

> Am I being a weirdo?

Probably, but there is nothing wrong with that! Chase you own happiness, not other people's goals, if you have the luxury of doing so, which it would appear that you have.

Just maybe have a plan B ready to change your mind to if life or your own mind changes later, and you want out to pursue something else.

> Some of my more "Silicon Valley"-type friends think I'm nuts.

I'm similar with my stance on staying in a safe, slightly stagnated, salaried lifestyle, avoiding the word "manager" or similar in my job description, when people tell me I could make a lot more contacting or managing teams on larger projects. I could do those things, but if I can support my hobbies, mental health (more or less…), and other lifestyle (mortgage on small flat being paid off in a few months) and find time for those hobbies, while making enough tinkering with interesting problems in the day job, why should I lose that to chase more later that isn't guaranteed, if I don't want to take that risk?

Though with the same caveat as above: I am currently trying to adjust my skillset a bit (bringing some rotted parts back up to date) so I have wider options for escape plans should I decide I don't like (and can't sufficiently effect from within) the changes that are going on around me.

[caprock]

Your situation sounds awesome, and I don't think your preference sounds weird at all. Congrats on the success!

You can find more like minded folks in the Indie Hacker community, if you haven't run across it yet.

See https://www.indiehackers.com/

[benjaminwootton]

One thing to realise is that a lot of those VCs will be junior analysts and tyre kickers looking to fill their diary. I am involved in a handful of businesses and they could all fill half of their week taking those calls, even though the investors are not serious. They conclude the call with “let’s keep in touch” even though the businesses have stellar growth and margins.

If I was to take VC funding again I would combine it with taking a big slug off the table personally to derisk things. For this to make sense you would probably need to scale the business quite a bit more before that becomes viable.

[dplgk]

What is a slug on the table?

[dividuum]

I’m in almost the exact same position, minus the knocking VCs. For a while I felt like I should look for funding and more growth to be a real „company“. Over time I realized that the path this would probably take me on isn’t really for me: I deeply care about delivering a quality product and managing my own time and priorities and I’m pretty sure that would fly out of the window. A VC funded competitor exists and is bigger, but the market is big enough for both (and others). I enjoy being the „weirdo“.

[newaccount74]

I make a bit less than you, and have also been approached by investors.

I'm not sure what an investor would bring to the table. I guess they would tell me to hire people, tell me to raise prices, tell me to do more marketing, etc. I doubt they would pay me substantially more than I make now without substantially increasing the amount of work I have to do.

I don't really want to do any of that. I've tried hiring people, and didn't like the responsibility. I realised I prefer working on my own. I make enough money to support my family, and I prefer having the free time to read HN instead of hustling to get more people to buy my app.

[tlb]

Either path can be right for different people. And the wrong decision can be horrible.

You can always take VC later, but you can’t un-take it. So you should be pretty sure that you want to spend the next 10 years of your life shooting for a billion dollar company. Otherwise, stay the course.

Taking seed funding (such as from YC) is not as big a risk as VC funding. Seed-funded companies often don’t go on to take VC, and while seed funders will encourage you to go for the big time, they won’t have the board fire you from your own company like a VC would if they think you’re under-delivering.

[codingdave]

Bootstrapping a business is normal outside of tech, and common in tech when outside of SV. Not only is it a good thing, it allows you to be more sustainable. VC will push you to be huge - to them, a small successful business is a failure: They need monster-sized successes. So they will push you to take large risks to get you there, and not really care if those risks cause your business to fail because they are pushing a dozen other people like you to do the same.

So if you are happy with the money and passionate about the space, you'd honestly be nuts to take VC funding.

[tpoacher]

You're not a weirdo, but you should also be realistic that, if a megacorp wanted, they could easily create a subpar clone of your offering, and drive you to obsolescence with marketing within months.

There was a recent story here on HN from someone who described just that. Can't remember the link, alas. EDIT: found it, see reply below.

[tpoacher]

Ah, I remembered I made an anki note about it, because I liked one of the quotes. Here you go:

"Failure sneaks up on you slowly, then all at once."

Andrew Wilkinson, founder of Flow (a distributed to-do list app), on how his company withered because he didn't consider cash-heavy competition to be comparable due to an (initially) worse product. From his Twitter thread "This is a story about how I lost $10,000,000 by doing something stupid." https://twitter.com/awilkinson/status/1376985869542887425

https://news.ycombinator.com/item?id=26643608

See also: False Hope Syndrome

Corollaries: - Heed red flags early - Optimistic: Perhaps the same applies to success / learning etc.