Bootstrapping vs. Fundraising: Which Is The Best One For You?

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Are you planning to open your own startup? What is the best way to gather the money you need: bootstrapping or fundraising?

The question whether a startup founder, new to the scene of business, should opt for raising funds or if he should choose bootstrapping, has been a heavily discussed topic for years and years.

What should one choose? Diving into this matter alone and working several jobs in order to be able to raise a business using personal investments exclusively, sure sounds exciting and fulfilling! However, it is quite risky as well. On the other hand, searching for investors who are willing to provide the support needed for opening a startup, might seem like an easier path.

Don’t get deceived by appearances, though!

Each of these options has a plus and a minus to their side, but in the end, everything depends on your project’s nature and the amount of investment it requires. The relationship you have with money, in general, is also another factor you need to take into consideration. It’s imperative for you to feel at ease with your choice; after all, you will be the only responsible for your business’s success or failure!

Opinions on this matter are divided. Some founders claim that starting a business with a loan is the worst thing one could do. Others are more reserved in what funding through investors is concerned. Too much money is worse than having too little and the temptation of spending more than you really need is too strong.

To give you a clearer picture of how these two concepts are perceived by entrepreneurs, StartUs Magazine has asked startup founders from all over Europe for their opinion on bootstrapping as opposed to raising funds through different types of investors. What did they go for when building their businesses? Let’s find out!

#1 Cosmo Currey, CEO of HerSmile

When asked about the choice he made the moment he first started his company, Cosmo Currey said right from the start that it took him 7 years of working multiple jobs to raise the money he needed for his startup:

When I started HerSmile I was told there was no way we could afford what I wanted to do with the amount I had saved. So, I simply had to make it happen. It definitely has not been an easy route to take, but HerSmile has been entirely self-funded; we have no third part debts and I have retained 100% of the shares.

He also added that in spite of the reduced marketing budget, they managed to make the best of it and create a solid user base that is continuously expanding, but that in the upcoming months he is planning to approach investors for raising more funds.

#2 Helmut Juskewycz, CEO of LingoHub

Although LingoHub has started out as a bootstrapped startup, its founder does not really favor this type of funding. He mentions the fact that even though it maintains your focus, it also limits the opportunities you might come across should you opt for raising money.

They are also currently seeking for an exterior form of funding, but when asked if he were to start another business, he answered:

I would probably start financed, but the reason maybe is that now I have a family to support.

#3 Alen Saqe, founder of Dentem

In the interview given to StartUs Magazine, the CEO of Dentem revealed the fact that bootstrapping was also his first option in the process of building his startup. However, he also added that he is looking to expand his company even more and that, in order to do so, raising a seed round to push this growth is essential.

#4 Jeroen De Wit, CEO of Teamleader

Unlike all the startups that have been mentioned above, Teamleader raised money from the beginning. 2015 was a great year for them, as they managed to a series A round of 2.5 million euro. They also used their founder for the development of their product and for entering a market completely new to them, Germany. They are so pleased by what they accomplished that they are looking for another funding round this year, to continue their expansion.

So far, you have probably noticed a pattern over here: most startup founders will choose to start their companies using the money they put aside over the years with this exact purpose. With a lot of hard work and financial obstacles they managed to overcome, these startups are now running successfully, but they all have one more thing in common: they all need further development.

Bootstrapping, in this case, is no longer a viable solution, as these developments require a more complex type of funding. This is the point where investors step into the scene and play their part.

Somehow, it may seem that raising money is an imminent phase in the life of a startup. At least, this is what some of the interviewed entrepreneurs have confirmed. Don’t take it as it is, though! If you really want to avoid fundraising and if you play your cards right, you can go bootstrapping all the way. Bear in mind, though, that this path can be just as hard as hunting for investors.

In the end, I guess that, whatever your choice turns out to be, you should be aware that there is a long road ahead of you. So, make sure that you are opting for something you are going to be comfortable with for the whole journey. No one else but you will hold the responsibility for your success or for your failure.

 

 

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