Pride of bootstrapping vs glamour of venture capital backing: What will make your startup standout

Global FundraisingBy Profit Board Last updated on Dec 21, 2020

Every idea does not have the potential to be a unicorn. Neither there issuch a need. The success parameter of a startup is not whether it is externally funded.

 

Bootstrapping vs VC Funding – the age-old debate has no specific answer. Bootstrapping refers to the act of starting a company without seeking external funding. Raising funding, on the other hand, is when you seek out investors (debt or equity) and get them to invest money in your company. There are tons of glitzy success stories of startups accelerating growth with fundraising. At the same time, there have been entrepreneurs who have used bootstrapping as survival means until they got to a steady revenue figure, and then have sought funding. This acted as a proof of concept for them and enabled them to ask for a premium. Some factors that are important in deciding whether fundraising or bootstrapping is the right choice for you are:

• Existence of a strong proof of concept that will lead to a favorable valuation
• Need to accelerate your team’s growth to support your product development
• Product’s reliance on expensive infrastructure
• Types of growth challenges and limitations

Are you a VC fit business?

Every idea does not have the potential to be a unicorn. Neither there is such a need. The success parameter of a startup is not whether it is externally funded. We have seen startups operating small independent units, catering to their niche audience, being profitable, and scaling.

Market Bias

How is the market that you are operating in reacting to being funded or bootstrapped? For instance, if you’re in a highly competitive “winner takes all market”, this means that you do not have the luxury for slow and steady growth. Scaling up fast and furious is a necessity. This, in all likelihood, means that you won’t be profitable in the near future and need an external boost to afford your growth.

Alok Patnia, our Managing Partner shares his opinion on this. Read the full article on: Financial Express

 

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