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So what are the second order effects we're going to see? Will bootstrapping businesses surge a bit? Something else?
Additionally, a lot of money is being pooled into AI companies so if you are starting a non-AI business it could be wise to bootstrap for a while until you get some sort of traction or PMF.
We are also seeing the rise of Solopreneurs who are not taking on capital and building cash flowing businesses from day one through leveraging their skillset and expertise.
As the economy starts to pick back up and interest rates mellow out we will probably get back to the "good ol' days" of free flow capital until something else disrupts the system.
I think one of the under-discussed consequences of generative AI will be that a single person / small team will be able to scale much more easily than before. It's very likely that a contemporary startup team of 3 people is equivalent to 10 or 20 people from a decade ago. Considering that a substantial portion of funding is typically aimed at hiring talent, this will definitely make bootstrapping more popular.
If it can't become a unicorn, it has to be bootstrapped. It's how the VC game works. There's exceptions, notably 500 Startups have said that they're happy with "my little ponies" ($10m or so) but there's very few who play in this space. Most VCs would consider it a failure and force the startup to either unicorn or die.
I'd say anything that can't hit a valuation of $1B or $10m is in very fertile grounds to be bootstrapped. They're too small to be VC backed and won't face all the suppression fire they'd get when competing with VCs. They're still acquirable; Android was angel backed and not VC backed then acquired for a ridiculously cheap price of $50m. That's enough money for most people to be happy with (including the angel investor).
I think one of the under-discussed consequences of generative AI will be that a single person / small team will be able to scale much more easily than before. It's very likely that a contemporary startup team of 3 people is equivalent to 10 or 20 people from a decade ago. Considering that a substantial portion of funding is typically aimed at hiring talent, this will definitely make bootstrapping more popular.
The issue is that if LLMs are powerful enough to generate a product, then at certain point, companies are just going to buy hardware to run LLMs instead of paying the "middlemen" companies who used said LLMs to make a product to sell.
Also, re-reading your comment, I don’t really mean using LLMs to generate a product. I mean to amplify the skillset of the business. “Bicycle for the mind” and so forth.
i bootstrapped a hw business and looking back i regret it. i thought i could raise at a better valuation later, and trusted this logic after reading about it on hackernews years ago. however what i found is that the investors i pitched once i had customers, were no longer interested because they thought the traction was too small, and they did not take into account the miniscule capital it took to get there and the i…
e.g.
"b20000s app/standanrd $industry app": 60% success b40000: Shiny and Fancy. With AIMLGPT machines. And all. 80% success"
Basically you are probably lacking urgency and humans tend to rest a lot of assumptions on some urgency, especially for business.
At least don't start by introducing the existing business. At best say you've spent x years as a CEO/CTO etc, and pull your experience in to answer questions, as well as clarify the situation if needed.
i bootstrapped a hw business and looking back i regret it. i thought i could raise at a better valuation later, and trusted this logic after reading about it on hackernews years ago. however what i found is that the investors i pitched once i had customers, were no longer interested because they thought the traction was too small, and they did not take into account the miniscule capital it took to get there and the i…
If your argument is that you grew slow bootstrapped but can replicate that 10x or 100x just by VC money, investors don't take that as a sign of strength or possible future success.
You can bootstrap but you need to show high traction to raise money from investors. Bootstrap or not.