Bootstrapping or VC funding? Twenty reasons not to take the money

The art of bootstrapping is more than a financial strategy for startups, it’s a founder mindset that puts resourcefulness, creativity, and resilience alongside a shoestring budget, testing the ability to build and grow. Bootstrappers take an idea without the backing of anyone else, and having little or no starting capital, do it for themselves. 

It takes single-mindedness to achieve success this way, but many of the successful companies we see today had humble beginnings as bootstrapped enterprises – Dell. Apple, HP, eBay, Go-Pro for example. The founder mindset is key. With minimal cash available, bootstrapping offers a markedly shorter window of finding product-market fit, and forces founders to determine how to monetise early on. 

The last decade saw ultra-low interest rates sustaining a form of zombie capitalism and created an illusion of startup prosperity. But this has rapidly unravelled. This rhetoric around tech startups hides an extraordinarily rapid switch in the balance of power between startup founders and investors. The term tech startup entrepreneur has been glamorised to the status of celebrity, creating a whole generation of founders enthralled by the prospect of raising a round and being transformed into a unicorn with an inappropriate yearning.

Einstein said compound interest is the eighth wonder of the world. Morality pitted against the compound leverage of capital is often outmatched, but there are people building startups outside the sphere of the venture capital dominion that have little systemic need to sell their soul.

Recognise your thirst for venture capital is vanity capital. Entrepreneurship is an emotion of ambition. Venture capital appeals to another emotion - greed. Stop chasing investors and start chasing customers. Avoid the time wasted for attracting investors, managing their expectations, and getting through to the next round of funding. If you're not a capital intensive business, you don’t need other people’s money, build a minimum viable business and nail those sales!

But at present, the mindset has shifted. Investors have won. Why have they won? Well, the gung-ho sentiment of raise money, raise money has killed off the do-it-for-yourself bootstrapping ambition and ethos.. 

The origin of bootstrapping comes from pulling oneself up by one’s bootstraps, a reference to C19th high-top boots that were pulled on by tugging at ankle straps. It generally means doing something on your own, without outside help, and in many cases, the hard way.

Bootstrapping is the minimalistic startup culture approach, characterised by extreme sparseness and simplicity. In other words, a process whereby an entrepreneur starts a self-sustaining business, markets it, and grows the business by using limited resources or money

It’s hard to carry on a conversation with most startup founders these days without hearing the word round. Their eyeballs fixate on money, valuations, and the next round. Once you take the money, it’s a debt owed, with all the nagging reciprocity that comes with it. Don’t just accept the definition of success is the next round because everyone else is cheering that. The chorus of the masses is loud, and that’s seductively alluring. 

But let’s take a step back. My overarching startup philosophy is that at some future point you may need to take some cash, but don’t confuse raising with building your minimum viable business. Here are my twenty reasons not to take third-party funding and live the frugality of bootstrapping as to why you started your own venture in the first place.

1. Retain control and independence Taking external funding means giving up some element of ownership and control. Other people’s money changes everything, when you take their money you’re working for someone else again, instantly. Founders started off their journey because they value their freedom and often prefer to own their destiny rather than answer to investors. Keep that in mind.

2. Avoid pressure for unrealistic growth External funding often forces startups onto a fast growth crazy treadmill. Investors expect growth, which can stunt a company’s natural development. Venture funding creates an expectation, often seducing founders to a go-big-or-bust dynamic. In contrast a steady growth self-funded company can give founders a feeling of contentment and build at their own pace.

3. Build a sustainable, profitable business Many founders would rather build a sound, profitable company than play the lottery for a 10x exit. Investors however, only care about moonshots, not steady state. Bootstrappers focus on sustainable growth and build a viable business instead of burning cash to chase an unlikely high value exit.

4. No treadmill of endless fundraising Raising money once leads to raising round after round, consuming hours of time and buckets of emotion, whilst diluting founder ownership but heaping pressure on them to perform. Hardly anyone ever does just one round, it’s like you’re going back to the drug dealer in what seems to be the habitual fundraising cycle. By not taking external funding, startups avoid being stuck in survival mode awaiting the next cash raise and avoid the endless round of pitches, decks, and meetings  that diverts precious focus from product and customers.

5. Keep more of the wealth you create The longer you can go without raising, the more equity remains with the founders and early team. Every round dilutes your stake, often backed up with unfriendly terms whereas bootstrappers who eventually succeed enjoy a far greater share of the reward. The hangman’s noose of liquidation preference is always there.

6. No unwanted board Interference External capital inevitably comes with a board seat or investor oversight. This can mean ceding strategic control and is a practical and emotional overhead that changes the founder relationship dynamics and agenda, and is only worth the sacrifice if the cash is truly necessary.

7. Focus on customers, not Investors With no outside investors, your only route to cash is your customers. Generating revenue from real users forces you to make something people actually want, which is the essence of a viable business. Customer revenue is genuine validation of your startup idea.

8. Raising money is not success in itself It's easy to equate closing a round with success, but raising money is not an accomplishment, it’s an obligation making you accountable to new stakeholders. It’s often also a necessity to keep the lights on. Funding is a means to an end, not the end itself. Without external funding founders are forced to work on making their venture cash positive and profitable, which is the primary goal.

9. Avoid premature and vanity scaling In my experience, hiring too fast is by far the biggest killer of startups that raise money. Flush with investor cash, founders often over-hire and overspend, free from the constraints of prudent planning and rationing funds. When a startup has a healthy bank balance, there’s a temptation to spend freely. Constraints make teams scrappier and more creative.

10. Keep a founder mindset Raising capital can turn an entrepreneurial founder into a manager of investor’s money, rather than striking out with bold thinking. Other people’s money changes everything in terms of accountability - good governance is essential - but the vision and agenda for the business can be unduly influenced. Staying small until you get it right keeps your creativity alive.

11. Preserve your purpose, culture and values Outside investors might like your business model and performance to date, but could have undue influence and pressure you to pivot away from your original mission if things don’t go to plan. Founders who bootstrapped often credit their independence for letting them stick to their values.

12. No forced exit horizon: Most investor funds operate on fixed term cycles and need a return within a defined period. This means investment managers must have a liquidity event and thus founders are operating on someone else’s timetable. Staying independent means you decide if and when to sell.

13. Hungry teams innovate more Constraints breed creativity. Staying lean forces you to ‘do things that don’t scale’ and find unconventional growth hacks. I’ve seen startups become complacent and sloppy having raised, losing the drive and hunger, almost becoming comfortable.

14. Avoid dilution too early There is a high chance raising too much too soon will see you sell yourself short. Raising money too early can mean giving away a huge chunk of your company for very little. It’s the size of the pie not your slice of the pie that matters, a high valuation too early creates problems later on in terms of the cap table and future valuation metrics.

15. Avoid the high-valuation vanity trap Raising money at a high valuation might sound positive, but it sets a bar that your startup must meet in terms of performance expectations - fall below this and you face the dreaded ‘down round’. Profitability becomes secondary to valuation, which is simply wrong.

16. You learn, learn, and learn some more There are a lot of lessons to be learned when you go about it the ‘hard’ way of bootstrapping. Everything always takes longer than expected. There are days you never think it's going to happen, but you push through. You learn new skills, because you have too, and about your own resilience.

17. Cash loosens discipline Cash makes things easier, and can remove friction and making hard choices when previously you had to ration cash. This can lead to less rigorous decision making and discipline in spending. Frugality is a startup virtue, providing it doesn’t hold you back too much.

18. Avoiding the false dawn of success I see many self-congratulatory social media posts ‘we completed a round’. It is undoubtedly an achievement to convince investors to support you, but too often folks get plaudits and lauded - only to subsequently fail. In recent years, fewer companies raising seed funding are successfully graduating to Series A, increasing failure rates at the early stages because they take the eye off the one thing that matters - generating cash by winning paying customers.

19. The battle to survive keeps you alert and savvy. Bootstrapped startups show higher survival (35-40%) and profitability rates, with more control, while VC-backed firms aim for rapid, massive growth, leading to higher failure (85-90% fail) but potential for huge exits. This highlights the  trade-off between sustainable, controlled success and high-risk, high-reward scaling. Bootstrappers focus on cash flow and longevity, weathering downturns better, whereas VCs prioritise aggressive expansion, even at the cost of premature scaling and high financial pressure on the founder.

20. Know when to raise money. Don’t do it for the sake of it. You should look to raise when speed matters more than ownership, when you’re building something truly capital-intensive or when the opportunity window is closing fast. Timing is everything. If the market is exploding now (like mobile apps in 2010 or AI agents in 2025), waiting a year might kill you. Money buys speed, when your startup is already default alive but funding makes it default dominant and you want to build something bigger than yourself or if you need scale for unit economics to work.

There are also lessons beyond this: you want investors who will bring more than cash, if the investor is a force multiplier, it’s worth dilution; when you can raise from the right terms, at the right time; the best founders raise from strength, not need — when metrics, story, product and market all align so you can choose long-term partners, not short-term saviors.

Summary Fundraising should never be your goal, it’s a  growth vector set against a clearly crafted strategy and plan. Raising money means giving up control, focus, and equity. I believe founders should prioritise building a minimum viable business with a route to breakeven and profitability, establishing a self-sustaining business before ever considering external capital.

Everyone’s entrepreneurial journey is unique, but the art of bootstrapping is all about Survive until you thrive through a combination of common sense, determination, and ingenuity. Build your minimum viable startup as your first objective.