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How we bootstrapped our SaaS to $1M ARR

scrapingbee.com

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Re: How we bootstrapped our SaaS to $1M ARR

#101

Post by cj »

threeseed wrote: post #94
cj wrote: post #93

Earlier quoted context omitted.

My definition of bootstrapping has more to do with the mindset you have while running the company, rather than whether the company actually has investors. There’s always someone putting money into getting a new business up and running (bootstrapping is not free). Whether that small amount of money comes from the founder’s pocket, family/friends, or an angel investor - the money to pay your AWS bill and other basic se…

You really don't understand bootstrapping do you. So my partner started a business during COVID. We don't have rich family/friends or know any angel investors and so we paid for costs by selling things, using savings and maxing out credit cards. No outside money. No modification to a cap table (not that it exists).

If tomorrow you decided to go and raise $100k from an angel (or if you received a $100k small business grant) to pay off your credit card debt and replenish some of your savings, I wouldn't immediately kick you out of the "bootstrapped founder" community.

I see your point though. There is "pure 100% bootstrapped" and "mostly bootstrapped, but not completely". IMO it's a spectrum. Just like the term "startup" - it's a spectrum, no binary definition.

Re: How we bootstrapped our SaaS to $1M ARR

#102

Post by codegeek »

jasode wrote: post #98
chinathrow wrote: post #95

Earlier quoted context omitted.

> If my business goes down, I am personally liable. Why? I also own my own business (an LLC somewhere in Europe), but if it goes down, I am not personally liable, at all (unless it's due to gross negligence established by a court case).

>Why? His comment included the fact the he took out loans with a "personal guarantee" . When you're a small business starting out with no assets (like factories, equipment, etc) -- which means no collateral, or no business revenue... the banks won't provide so-called "business loans" unless there's a personal guarantee. Therefore, if the business fails and the company is shut down, the founder is still financially on…

You nailed it!!

Re: How we bootstrapped our SaaS to $1M ARR

#103

Post by threeseed »

cj wrote: post #101
threeseed wrote: post #94

Earlier quoted context omitted.

You really don't understand bootstrapping do you. So my partner started a business during COVID. We don't have rich family/friends or know any angel investors and so we paid for costs by selling things, using savings and maxing out credit cards. No outside money. No modification to a cap table (not that it exists).

If tomorrow you decided to go and raise $100k from an angel (or if you received a $100k small business grant) to pay off your credit card debt and replenish some of your savings, I wouldn't immediately kick you out of the "bootstrapped founder" community. I see your point though. There is "pure 100% bootstrapped" and "mostly bootstrapped, but not completely". IMO it's a spectrum. Just like the term "startup" - it's a…

If you raise $100k from an angel then you were a bootstrapped company and now you aren't.

No spectrum. No complications. No twisting of words. Very simple.

Re: How we bootstrapped our SaaS to $1M ARR

#104

Post by HWR_14 »

chinathrow wrote: post #95
codegeek wrote: post #61

Earlier quoted context omitted.

As another bootstrapped founder, I disagree with you. "Our standard terms are for 10-12% equity." The moment you give equity in exchange for money no matter whether its tinyseed or whatever, you are not bootstrapping. Your financial risk is lower because you don't have to pay this money back if your company fails. That is not called bootstrapping. I bootstrapped with my own money AND some smaller loans which I am ful…

> If my business goes down, I am personally liable. Why? I also own my own business (an LLC somewhere in Europe), but if it goes down, I am not personally liable, at all (unless it's due to gross negligence established by a court case).

Basically, he personally borrowed money and put it in his LLC to finance it. For tax and other purposes, this is a more complex transaction that is somewhat legally different (the business took out and should repay the loan, avoiding his personally being taxed for the money). However, that's the best way to understand what happened.

Re: How we bootstrapped our SaaS to $1M ARR

#105

Post by no_wizard »

rhizome wrote: post #90
no_wizard wrote: post #77

Earlier quoted context omitted.

Why is that a problem? Bootstrapping is a privilege, just like raising any VC funding is, yet nobody is fighting to change the term for Venture Capital funded startups. The meaning of which has been well established, both inside tech circles and outside, to mean starting a business without raising any outside capital. Why do we want to suddenly stretch the meaning of bootstrap? The compelling story here would have be…

> Why do we want to suddenly stretch the meaning of bootstrap? Because VCs increase the risk that a company will turn to shit.

Doesn't make it okay to stretch the meaning of something that is well established. Not all VCs are bad, not all companys funded by VC money turn into crap. Not all VCs use the same model.

It would be best to explain this. Like I mentioned, why not plainly explain that they did all this with just seed money? That's a really amazing accomplishment in and of itself, and nuance is something that can be explained.

Not to mention, trying to stretch the meaning here is trying to glob a positive onto something that didn't earn it by fitting the definition. Again, why try to obfuscate the truth? Be proud of your background if you think you can be proud of it. Nothing wrong with that.

Just don't try and redefine something that already has concrete meaning. That's nearly the same thing, in my mind, as lying.

Re: How we bootstrapped our SaaS to $1M ARR

#107

Post by no_wizard »

kohanz wrote: post #63
rglover wrote: post #56

Earlier quoted context omitted.

Bootstrapping means you funded the entire thing out of pocket without any outside investment. There's nothing bad/wrong about how you did it, but it's not bootstrapping. Saying it is makes it confusing for newbies which means they're more likely to be taken advantage of by VCs that realize they can market themselves as a "bootstrapper fund."

Thinking about it in such binary terms is quite limiting and unhelpful though. It's a spectrum. I would consider ScrapingBee closer to a bootstrapped company than a venture-funded company. Heck, by your definition if I took $5k of friends & family money to start a business that grew to $5M ARR,I could not call that "bootstrapped". This is why Rob Walling (co-founder of TinySeed) likes to use the term "fundstrapped".…

Why is it unhelpful? Its okay for things to be binary sometimes. This is one of those cases, where the meaning of something, beyond even tech circles, has always meant starting and building a successful business without raising outside capital.

There's no good reason to change the definition of this. The disparagement is trying to co-opt a term that shouldn't be co-opted. If the headline was how we built a 1M ARR business from seed funding it'd be a very compelling article still. Now the sourness comes from trying to redefine a term that has very concrete meaning without providing strong justification for doing so.

Re: How we bootstrapped our SaaS to $1M ARR

#108

Post by [deleted] »

Bjartr wrote: post #57
BBC-vs-neolibs wrote: post #39

Earlier quoted context omitted.

So if I start with $1M of my own money, is it bootstrapped? If family (with fuzzy conditions) ponied up $250k, is it bootstrapped?

$1M of your money? Yes $250k from immediate family, if said fuzzy conditions don't confer any ownership or repayment? I'd say just barely yes (it's basically a gift to you at that point, which is then your money) $250k from a third cousin in return for equity? No. Being bootstrapped isn't an ungameable category, but it is a fairly unambiguous one IMO.

[deleted]

Re: How we bootstrapped our SaaS to $1M ARR

#109

Post by dreig »

capableweb wrote: post #7

Congratulations! But maybe "bootstrapped" is not a 100% correct. > MAY 2020 - Joining Tinyseed > And this is precisely why we never decided to raise money. However, a few years ago, [...] An accelerator designed precisely to help people grow their business [...] The money and the support we got from the program helped us grow ScrapingBee into what it is now

Looking at their MRR growth, it seems that they had ~$5K MRR in Spring of 2020, at the time they joined TinySeed. So perhaps a more technically accurate post would be: "How we bootstrapped to $60K ARR, then took a small investment and grew the company to $1MM ARR" ?

When, in the lifecycle of the company, can you sell a small stake of it and still call it bootstrapped? Basecamp sold a bit of equity in 2006 to Bezos[1], and is still considered the epitome of the bootstrapped company.

Additionally, if one has a couple hundred K after working at MANGA or wherever, or has wealthy parents/friends and uses that money to build their own start-up, is that still bootstrapping?

To me, their journey is much closer to bootstrapping, and is quite an impressive achievement. Congrats, guys!

[1]: https://m.signalvnoise.com/the-deal-jeff-bezos-got-on-baseca...

Re: How we bootstrapped our SaaS to $1M ARR

#110

Post by [deleted] »

nrmitchi wrote: post #40
chrisan wrote: post #26

Earlier quoted context omitted.

"VC'd yourself" is the definition of bootstrapping. You either take money from someone else or you bootstrap it yourself.

It's kind of disingenuous to try to make this same comparison across different people. What if you borrow money from family in order to start your business? Are you no longer "bootstrapping"? What is Bezos decides he's bored, and wants to start something new. Really looking forward to seeing the "most successful bootstrapper of 2030" be Jeff Bezos with his self-funded $5B "startup".

[deleted]
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