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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

#61

Post by codegeek »

daolf wrote: post #11
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

Co-founder here, I was waiting for this comment to be honest. So in essence, if you consider that bootstrapping is building a business without external funding, you're correct. But to me, bootstrapping VS "VC road" is much more nuanced than this. Going the VC road forces you to have crazy growth and raise more round because the VC model only works if they fund unicorn 1 time out of 100(0). TinySeed works even if they…

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 fully liable to pay off with a personal guarantee. If my business goes down, I am personally liable. That is bootstrapping.

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

#62

Post by codegeek »

mritchie712 wrote: post #15
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

TinySeed != traditional VC The biggest problem most people have with traditional VC and thus prefer to "bootstrap" is the pressure to grow too fast. TinySeed has none of that pressure. Boostrapping vs VC is a spectrum and Scrapping Bee is clearly on the bootstrapped side of that spectrum.

No. They got money in exchange for equity. If the company fails, they don't have to pay that money back. There is no personal guarantee from the founders. Bootstrapping means that you either used your own money or you got loans for which you are personally liable (credit card/bank loan/SBA etc).

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

#63

Post by kohanz »

rglover wrote: post #56
daolf wrote: post #11

Earlier quoted context omitted.

Co-founder here, I was waiting for this comment to be honest. So in essence, if you consider that bootstrapping is building a business without external funding, you're correct. But to me, bootstrapping VS "VC road" is much more nuanced than this. Going the VC road forces you to have crazy growth and raise more round because the VC model only works if they fund unicorn 1 time out of 100(0). TinySeed works even if they…

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". There are a lot more funding options out there that do not come with the narrow pathway associated with typical venture funding.

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

#64

Post by bonestamp2 »

mritchie712 wrote: post #15
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

TinySeed != traditional VC The biggest problem most people have with traditional VC and thus prefer to "bootstrap" is the pressure to grow too fast. TinySeed has none of that pressure. Boostrapping vs VC is a spectrum and Scrapping Bee is clearly on the bootstrapped side of that spectrum.

I'm not OP, and maybe my understanding is wrong, but I always understood "bootstrapped" to mean they only put in their own money and didn't get any outside investments. Is there a better set of terms to differentiate between self funded, accelerator funded, and VC funded?

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

#65

Post by YPCrumble »

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

This bootstrapping like how War is Peace, Freedom is Slavery, and Ignorance is Strength!

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

#66

Post by cjbgkagh »

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".…

It seems there are some definitions that allow for some external funding. I’m of the view that bootstrapped is no external funding; sounds like fundstrapped is a better term. Maybe seed funded.

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

#67

Post by ipaddr »

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".…

A 5 thousand dollar gift or loan? Or a trade of $5,000 for a percentage?

Bootstrap is a word with a specific meaning. It is not a spectrum it is a specific state of a spectrum.

It sounds like ScrapeBee has more bootstraping elements than VC elements. It's a hybrid. Less VC pressures but still some.

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

#68

Post by Zababa »

btown wrote: post #43
daolf wrote: post #11

Earlier quoted context omitted.

Co-founder here, I was waiting for this comment to be honest. So in essence, if you consider that bootstrapping is building a business without external funding, you're correct. But to me, bootstrapping VS "VC road" is much more nuanced than this. Going the VC road forces you to have crazy growth and raise more round because the VC model only works if they fund unicorn 1 time out of 100(0). TinySeed works even if they…

To me, it's really important that the tech community define "bootstrapping" as no more and no less than "having a plan to reach profitability with total investment on the order of what a [not-outrageously-wealthy] group of founders might invest," and to frame it as a good thing . With TinySeed's round at "$120k for the first founder, $60k for the second, and $40k for the third" ( https://tinyseed.com/program#program-…

$120k is an big amount of money, especially for people that don't have FAANG salaries. That could be an appartment where I live. A small one, but an appartment. It's also 3 years of earnings for me, or it would be if I didn't spend anything.

> If one further gatekeeps the label with "but the founders need to invest this personally or it doesn't count..." that restricts the label to a very small segment of privileged individuals.

People for which $120k is money that people around them can just invest are a very small segment of priviliged individuals.

Another point: tinyseed also offers mentorship. From the FAQ:

> I don’t need the money, is TinySeed worth it just for the mentorship?

> Short answer: yes.

This message is not to knock on the people behind ScrapingBee. Bootstrapped or not, they have built a very profitable business, that's impressive and deserves praise. I just think calling it "bootstrapped" is not correct.

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

#69

Post by codegeek »

btown wrote: post #43
daolf wrote: post #11

Earlier quoted context omitted.

Co-founder here, I was waiting for this comment to be honest. So in essence, if you consider that bootstrapping is building a business without external funding, you're correct. But to me, bootstrapping VS "VC road" is much more nuanced than this. Going the VC road forces you to have crazy growth and raise more round because the VC model only works if they fund unicorn 1 time out of 100(0). TinySeed works even if they…

To me, it's really important that the tech community define "bootstrapping" as no more and no less than "having a plan to reach profitability with total investment on the order of what a [not-outrageously-wealthy] group of founders might invest," and to frame it as a good thing . With TinySeed's round at "$120k for the first founder, $60k for the second, and $40k for the third" ( https://tinyseed.com/program#program-…

If you take money in exchange for equity, that is NOT bootstrapping no matter what spin we put on it. If the business fails, founders are not personally liable to return that money that was raised from investors. That is not bootstrapping.

Bootstrapping is your ability to come up with money on your own or through loans etc which you are liable to pay back. If you don't you could lose your home. Investors don't come for your home when you lose their money.

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

#70

Post by Zababa »

artembugara wrote: post #17
jgmmo wrote: post #14

Earlier quoted context omitted.

bootstrap = on your own. That's it. You had some seed funding.

Founder of another TonySeed startup. On your own can mean many things. I also burnt through my personal savings for the first year. So. On your own is just “VC’ed yourself” Taking money from TinySeed is very different than taking money from VC.

You're assuming that the only categories that exist are "bootstrapped" and "took VC money". That isn't the case. Raising money from friend, or taking a loan from a bank would be neither boostrapped nor VC-funded.
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