Bootstrapping or Funding?

Another interesting question on the forums:

Hi!

Is it really necessary to invest a lot of money to build something? I guess it depends a lot on the product. My start-up is based on a web app, and I don’t need to hire anybody at all, I do it all by myself, so I think I will only need to spend money on Google App Engine resources, which is not very expensive. I am being too optimistic? What do you think?

Carles

My Response

Hi Carles,

In your specific case as you tell it, it indeed sounds like bootstrapping is the way to go. But we have almost no information.

Just ask yourself these questions, for each atlernative (bootstrapping, getting angel-size investment, getting bigger angel-size investment and hiring help, getting VC-size investment):

What are my chances of success?

  • How much profit will the company generate*?
  • How much profit will I earn?
  • How will my lifestyle be before I become very profitable?
  • How much fun will it be?

* It’s not trivial that this has different answers for different initial investments, but if you think about it you’ll probably agree.

Make a table, think of the answers. They are different for every business and every founder. Who knows, you might even decide to get an investment and hire someone just because you feel lonely working alone, even though you can withstand spartan living conditions and have a slight preference for 100% of profit to 50%.

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