Bootstrapped startups, or companies that use their own revenue or existing cash flow to fund growth instead of relying on external capital sources, sit in a very separate box than venture-backed startups. By nature of asset class, bootstrapped startups prioritize revenue to keep alive, while venture-backed startups prioritize growth to keep investor buy-in for future runway needs. Bootstrapped companies follow less of an exponential growth curve, while venture-backed companies need to be an outlier.
Enter a downturn and both sides get a tad more interesting. The built-in business discipline of bootstrapped startups may feel especially downturn-proof as the overfunded companies announce rounds of layoffs. As venture starts to be more interested in the stable fundamentals of the startup bunch, is it the bootstrapper’s time to swing big?
For Healthie, a payments processor for healthcare companies, now felt like the right time to get on the “treadmill” of venture capital after six years of bootstrapping, according to co-founder Cavan Klinsky.
“If you’re a bootstrapped company who is not yet on the [venture] treadmill, you have that kind of optionality or that ability to choose when to get on,” he said. “Once you’ve already raised a bunch of ventures, you’re kind of building a business for venture scale, whereas if you are bootstrapped … you can be really really opportunistic about what that right time is.
For my full take, read my TechCrunch+ column: Will once-bootstrapped startups turn to venture during a watershed moment?
In the rest of this newsletter, we’ll get into a play on Honey for the real world and behind some significant layoffs happening in tech. As always, you can support me by forwarding this newsletter to a friend or following me on Twitter.