The terms “fundraising” and “venture capital” are tightly linked. Raising money by bootstrapping is usually a secondary funding option. But is going the VC route better than bootstrapping?
Clement Vouillon of Point Nine Capital took a look at company data to compare bootstrapping vs VC funding. So what is the main difference? As you might expect, VC money helps companies scale. The biggest companies in the set were all VC-backed.
VC-backed companies had higher MRR, customer lifetime value, and number of employees. However, the bootstrapped companies put up respectable numbers, especially considering the VC-backed companies raised almost 5 times as much money.
Churn was similar for both types of companies. More money doesn’t necessarily lead to a more popular product.
Do you have to secure VC money to get big? Not necessarily. Here are 10 bootstrapped companies with $1 million ARR. Additionally, trends in recent years have made it more common for SaaS companies to bootstrap.