

Ask YC: Is your startup bootstrapped, funded, or both? - shafqat

Would be interesting to see the diversity of startups and their funding situation given all the turmoil and doom/gloom postings recently.
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nostrademons
Probably should make a distinction between "bootstrapped" and "self-funded"
here. Technically, a bootstrapped startup is one that sells a nonexistent
product to an early-adopter customer _first_ , and then uses that money to
fund development. Or one that starts as a consulting company and then
gradually builds out a product based on client needs. Think of Sun, Allegro,
37signals, or FogCreek.

A self-funded company is one that relies on founder savings or wage income to
fund initial development, and then finds a customer after they have a product.
Think Del.icio.us or Flickr before their angel investments.

Anyway, my last startup (GameClay) was 100% self-funded. If I choose to do
another startup instead of taking a job, it'll also be self-funded, but I'll
probably focus on identifying paying customers and generating revenue earlier
in the process, which would make it closer to a bootstrapped startup.

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MicahWedemeyer
I've read your diffle-history blog, and it's amazing the parallels I've seen
with my own work.

I'm spinning up my second startup now, and taking a similarly revenue-oriented
approach. Forget about pageviews and popularity and focus on revenue.

However, I'm also going to focus on possibly getting angel funding this time
around.

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trapper
Great news. Selling isn't actually hard, but it's scary especially as most of
us on this site have below par selling skills. Metaphorically, "Knocking on
the door" is the hard part.

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puzzle-out
My co-founder and I have cut taking a salary from our start-up, which is angel
funded. We've both taken (surprisingly well paid) part-time jobs at a local
university as mentors to a group of 60 business students on an enterprise
module. It's like being back in the garage - recharges the entrepreneurial
batteries, keeps the investors happy, and we're meeting future potential
employees. HIghly recommended.

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shafqat
I'll start: I'm cofounder of NewsCred. We are 100% boostrapped so far with
very negligible burn rate. About to close a small angel round.

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dshah
My startup (<http://www.HubSpot.com>) started off self-funded but is now
venture-funded ($17 million in two rounds of funding).

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shafqat
That's great.. have read a lot about you on your blog. Are you guys generating
revenue?

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cperciva
Neither. Tarsnap isn't profitable yet, so I can't really say that it's
bootstrapped; but I don't have any external funding, either.

Rather than being bootstrapped or funded, tarsnap is a living-in-the-
parents'-basement startup.

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nostrademons
I've sometimes wondered whether that should count as a "friends & family"
investment. After all, family's putting up the money (in the form of
subsidized rent) for the startup.

And does the status change to "self-funded" if you pay your parents rent?

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cperciva
I don't think it qualifies as a "friends & family" _investment_ , since
they're not getting stock. But you could certainly call it a friends & family
_donation_. :-)

 _And does the status change to "self-funded" if you pay your parents rent?_

It would, but I don't.

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sgrove
We're between self-funded and bootstrapped - we put up a small initial
monetary investment for servers and whatnot, and evangelized the product as we
built it.

That being said, we're working on some big grant opportunities right now (the
economic turmoil actually works in our favor to some degree), so I suppose
we'll be "funded" soon, though without giving up any equity.

Really, there are probably endless ways of mixing and matching these different
methods.

