So you have a big idea. You’ve got your team. You’ve proven your idea has legs. Now you just need the money to really kick start your company.
So what do you do?
You could sell up everything you own; take out a huge bank loan (for a risky idea they’ll be hesitant to back), or maybe you could go down the venture capital road.
All have their pros and cons, but the decision will ultimately lie in what you want for your business and how much control you want to have in major strategic decisions.
Some of Australia’s biggest successes have done very well through venture capital, from Canva to Atlassian and Campaign Monitor. Others, like Xero, have taken that capital only after going to public markets first.
But among the hubbub of who has raised a million here or $50 million there, it can be easy to forget about the tradeoffs often involved in taking venture capital.
Not only will you be giving away a chunk of what you’re building for potential future gains, you’re also gaining new masters who don’t necessarily have the passion, ability or risk acceptance you do.
Many venture capitalists require liquidity preferences in term sheets that effectively translate to them taking minimal risk in giving you capital, while the founder gets left with nothing in event of a disaster.
Some founders may not even raise an eyebrow. But for others, it’s unthinkable. At least not in the current stage of your business lifecycle.
If this is the case, then perhaps you should consider bootstrapping your company.
Bootstrapping essentially means that you start your business with no money — or, at least, very little money — and you put back into the business all the money you earn from customers.
It might sound like a difficult path, but it’s becoming more and more popular. Atlassian and GitHub for example both bootstrapped their company using minimal resources – in Atlassian’s case, a $10,000 credit card – and a dedicated team, and are now, hugely successful.
The importance of bootstrapping is that you prove your product and business has value by getting actual customers and having them pay you for your product. They’ll want to work with you on making the products better and they’ll be your best evangelists.
But if you’re still unsure, here are five reasons why you should consider bootstrapping your company:
Five reasons you should consider bootstrapping your startup
By: Sebastian Pedavoli
So you have a big idea. You’ve got your team. You’ve proven your idea has legs. Now you just need the money to really kick start your company.
So what do you do?
You could sell up everything you own; take out a huge bank loan (for a risky idea they’ll be hesitant to back), or maybe you could go down the venture capital road.
All have their pros and cons, but the decision will ultimately lie in what you want for your business and how much control you want to have in major strategic decisions.
Some of Australia’s biggest successes have done very well through venture capital, from Canva to Atlassian and Campaign Monitor. Others, like Xero, have taken that capital only after going to public markets first.
But among the hubbub of who has raised a million here or $50 million there, it can be easy to forget about the tradeoffs often involved in taking venture capital.
Not only will you be giving away a chunk of what you’re building for potential future gains, you’re also gaining new masters who don’t necessarily have the passion, ability or risk acceptance you do.
Many venture capitalists require liquidity preferences in term sheets that effectively translate to them taking minimal risk in giving you capital, while the founder gets left with nothing in event of a disaster.
Some founders may not even raise an eyebrow. But for others, it’s unthinkable. At least not in the current stage of your business lifecycle.
If this is the case, then perhaps you should consider bootstrapping your company.
Bootstrapping essentially means that you start your business with no money — or, at least, very little money — and you put back into the business all the money you earn from customers.
It might sound like a difficult path, but it’s becoming more and more popular. Atlassian and GitHub for example both bootstrapped their company using minimal resources – in Atlassian’s case, a $10,000 credit card – and a dedicated team, and are now, hugely successful.
The importance of bootstrapping is that you prove your product and business has value by getting actual customers and having them pay you for your product. They’ll want to work with you on making the products better and they’ll be your best evangelists.
But if you’re still unsure, here are five reasons why you should consider bootstrapping your company:
So you have a big idea. You’ve got your team. You’ve proven your idea has legs. Now you just need the money to really kick start your company.
So what do you do?
You could sell up everything you own; take out a huge bank loan (for a risky idea they’ll be hesitant to back), or maybe you could go down the venture capital road.
All have their pros and cons, but the decision will ultimately lie in what you want for your business and how much control you want to have in major strategic decisions.
Some of Australia’s biggest successes have done very well through venture capital, from Canva to Atlassian and Campaign Monitor. Others, like Xero, have taken that capital only after going to public markets first.
But among the hubbub of who has raised a million here or $50 million there, it can be easy to forget about the tradeoffs often involved in taking venture capital.
Not only will you be giving away a chunk of what you’re building for potential future gains, you’re also gaining new masters who don’t necessarily have the passion, ability or risk acceptance you do.
Many venture capitalists require liquidity preferences in term sheets that effectively translate to them taking minimal risk in giving you capital, while the founder gets left with nothing in event of a disaster.
Some founders may not even raise an eyebrow. But for others, it’s unthinkable. At least not in the current stage of your business lifecycle.
If this is the case, then perhaps you should consider bootstrapping your company.
Bootstrapping essentially means that you start your business with no money — or, at least, very little money — and you put back into the business all the money you earn from customers.
It might sound like a difficult path, but it’s becoming more and more popular. Atlassian and GitHub for example both bootstrapped their company using minimal resources – in Atlassian’s case, a $10,000 credit card – and a dedicated team, and are now, hugely successful.
The importance of bootstrapping is that you prove your product and business has value by getting actual customers and having them pay you for your product. They’ll want to work with you on making the products better and they’ll be your best evangelists.
But if you’re still unsure, here are five reasons why you should consider bootstrapping your company: