Long Life Dilemma: To Bootstrap or To Fundraise
As someone who builds a startup, of course, we have a lot of desires which certainly make our startup grow and we get closer to our goals. Getting to our goal will definitely cost us a lot of effort, time, and money. Sometimes we want large resources so that we can immediately make all our wishes come true. Okay before we make a decision, it’s good if we stop for a moment and try to reason our decisions going forward. Should we take it back from our own pocket (bootstrapping) or start looking for investors?
Try asking a few things below before finally making a decision:
1. Why do you want funding?
Many startup founders consider funding as a ‘way out’ to get what we want. That’s not completely wrong. But asking deeper reasons is also important. Why do we need funding? What is the reason?
If the reason:
a. Because all startups do.
b. Because funding makes our lives more comfortable, for example, to move to a closer office.
Please, do bootstraping instead.
If the reason:
a. You have a short window of market opportunity, and funding will help you accelerate your plans and capitalize fully.
b. You’re looking for the specific insight and expertise a VC can bring, and you’ve researched exactly whose investment you want.
Maybe you can consider funding as a way out. But please, if there is no really necessary reason, it’s better to just bootstrap.
2. What are your startup’s long term goals & vision?
Remember, looking for investors is like finding a life partner that you want to marry.
You certainly don’t want to find a wrong life partner. So make sure you look for investors who will also support the long-term vision of your startup. Don’t just be tempted by the many investments offered.
3. How strong is your startup?
The investment must be returned, in higher value, of course. We believe all founders understand that too. It takes a commitment to want to return and continue to drive your startup to be able to restore existing expectations. Is your startup ready for that?
Here are 3 things that you can try to make a point for you to consider:
a. Target addressable market. Most VC investors who are looking for a large market are targeting those that can generate more than US $ 1 billion in revenue.
b. Competition. Startups that stand out to investors have little to no direct competition to limit market share and potential returns.
c. Execution. VCs will expect to see that you have successfully executed your plans.
If you feel that your startup is not ready and strong enough, again, it’s good to keep bootstrapping.
In the end, many have ended up asking whether the bootstrapping decision hindered the development of a startup? It depends. Bootstrapping does not mean you are giving up your ambitions for success. Bootstrapping can also be the wisest decision. Many things can be in place for your startup to become a strong and effective startup. For example, implementing working from anywhere methods allows you to make employees feel comfortable working in their own conditions, and your startup can cut costs for the office, then allocate the cost to product development.
So, if again and again, the statement comes o mind, ‘We should fundraise!’ always remember to do a follow-up question of ‘What for’.The key is finding the solution that is right for your startup- and the ambition you have for it.
