The Pros and Cons of Bootstrapping vs. Fundraising

E5: When does it make sense for you to bootstrap your business? And when should you raise funding? We're talking about the classic question of bootstrapping vs. fundraising. After making this important decision myself, these are the main considerations that you need to know and they may not be what you think.

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TOPICS:
Stakeholders Deciding Your Company's Future (1:22)
Who are the decision-makers in your business? If you want full control over the future direction of your company, bootstrapping is the way to go.

Ty Haney & Outdoor Voices (2:46)
Outdoor Voices, an athleisure apparel brand, was one of the hottest direct-to-consumer startups at one point. At one point, Outdoor Voices had 130 employees with 11 brick-and-mortar stores nationwide.  Outdoor Voices had raised more than $60 million in VC funding. Mickey Drexler, famous for building both the Gap and J. Crew into retail icons, invested in the company and served as chairman of its Board of Directors. Haney and Drexler had conflicting views on the company's future. Eventually, this divide drove Haney out of her own company.

Lifestyle Business (5:05)
If you're bootstrapped, you decide how you want to design your own life and how your business fits within it. As the primary decision maker, you choose how fast you want to grow.

Type of Business You Are Building (7:03)
If you are starting a company in a market that’s already well-established, it's better to bootstrap. If your company is changing or completely reshaping an industry, you may need to raise VC funding so that you can deploy as much leverage as possible.

Blitzscaling (8:42)
According to Reid Hoffman, Co-Founder of LinkedIn and Partner at venture capital firm Greylock, blitzscaling is what you do when you need to grow quickly.

Optimizing for Money vs. Time (9:05)
A bootstrapped company needs to prioritize cash flow and preserve capital above everything else. A venture-backed company’s top priority is growing as fast as possible at all costs in a race to become the industry leader.

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LINKS:
Episode 1 - How to Turn Your Passion Into a Business
Episode 3 -  Secrets of Compounding

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First Class Founders is a show for indie hackers, bootstrapped founders, CEOs, solopreneurs, content creators, startup entrepreneurs, and SaaS startups covering topics like build in public, audience growth, product marketing, scaling up, side hustles, holding company, etc.

Past guests include Arvid Kahl, Tyler Denk, Noah Kagan, Clint Murphy, Jay Abraham, Andrew Gazdecki, Matt McGarry, Nick Huber, Khe Hy, and more.

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