Bootstrapping vs. Raising VC Money: Should you raise VC money?

When to Consider Bootstrapping Your Startup and When to Seek Venture Capital Funding

Author

Trey Layton
April 25, 2024

This is The Startup Breakdown, the newsletter where we learn, laugh, and love startups. By joining this growing community of hundreds of future startup aficionados (think i spelled that right?), you're getting a beachside view of the ocean that is the startup and VC scene. This ain’t your grandpa’s newsletter, so prepare yourself for an inbox full of 4/20 jokes and Succession references.

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Happy Thursday, folks.

Bootstrapping vs. Raising VC Money for Your Startup

There are regional variations of the phrase “dick measuring contest.”

In Texas, people compare truck size, seeing just how many ladder rungs it takes to climb into the driver’s seat of their tricked out diesel.

In Massachusetts, it’s how many “we support x group” signs one can fit in their yard.

And in Silicon Valley, it’s how big your latest VC round was.

However, while it's cool to be able to say you raised tens of millions of dollars from some of the most respected names in tech, it's important to note that they're not giving you money just ‘cause.

They're buying part of your company, and there are genuine downsides of the process. This is where bootstrapping comes into play.

What are the pros and cons of raising VC money, and when should you raise it versus tough it out and bootstrap?

Let’s get into it:

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  • Nvidia is acquiring Run:ai for $700 million.

    • The former’s DGX Cloud AI platform will get an infra boost from Run’s core product, and the latter gets a massive exit for one of the world’s largest companies looking to further its advantage in the picks and shovels game

    • Hate to sound like a broken record but AI is a rich CEO’s game

  • The Senate approved the TikTok ban.

    • TikTok is preparing a legal challenge on the grounds that it would violate Americans’ right to free speech

    • They also don’t seem to be remotely open to the idea of divesting to an American company

    • This one will be nasty, and there will no doubt be retaliation from the Chinese government against American companies like Riot Games, which is owned by Chinese Tencent

  • I’ve recently come around to the idea that Discord may be the best place to house user interactions for an MVP. Unfortunately, the company’s docs suck, and building is an absolute pain in the ass. I finally found a resource that can help, though:

  • Don’t look now, but universities are accepting that the future of collegiate athletics is revenue sharing with athletes…

  • Turns out Instagram can be educational? Seriously, this kid’s account is one of my favorites and provides some genuinely amazing ideas if you’re looking for projects to level up your coding

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Cheers to another day,

Trey

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