from Hacker News

Ask HN: Bootstrapped vs funded startups, what are non-obvious differences?

by cavalcade on 10/21/11, 5:43 AM with 6 comments

• by patio11 on 10/21/11, 6:03 AM

  I just had the opportunity to tour the Valley a few weeks ago and talk to people. The big totally-did-not-expect-that thing that kept coming up in conversations: the relationship between co-founders is often intensely stressful and frequently a source of business failure. I was expecting that people occasionally had different ideas on directions for the business. Some of the stories put me in mind of tabloid coverage of Hollywood divorces.

  Not sure if that is a funded-startup thing exclusively, as I know at least one bootstrapped startup with co-founder drama, but adding investors to the mixed seem to bring a lot of things to a boil.

• by strebel on 10/21/11, 8:56 AM

  We are based in Arizona and bootstrapped. I have made this analogy in the past: "Arizona company's have to be hearty like a cactus with a 'real business' built on a sound model to cope with scarcity of resources. SV based funded companies are as plentiful as spring flowers are here in the desert but rarely make it through the summer heat"

  Silly okay.. but I think it speaks to the culture. No one I know here in Arizona includes "after our series A" in their plans. A higher valuation seems to be the end goal for most startups in the Valley, and dramatically alters the way they do things.

  Personally I would dread trying to outrun the burn rate funded companies operate under as 99% of them have no revenue or not enough to turn a profit.

  We are forced to build a 'boring' business that can sustain itself from nearly day 1, which leads to a different culture entirely. We solve the revenue equation first, which makes things easier and less stressful in the long run. My 2 cents and YMMV

• by rfurlan on 10/26/11, 1:04 AM

  1. Getting funded can generate a great deal of buzz, which can be very beneficial. 2. Having investors means having access to their networks, which is sometimes worth more than money. 3. If you bootstrap, every single dollar you make is yours. Also, every dollar you spend could have been yours to keep. 4. Without having investors freaking out about their 30x returns you might not move as fast as you could. 5. It is nice to have your investors pushing you outside your comfort zone (to give that talk, make that phone call).