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How we bootstrapped our SaaS to $1M ARR

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

#91

Post by mathgladiator »

threeseed wrote: post #89
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 VS "VC road" is much more nuanced Sure. But don't try and redefine what bootstrap means. It means building your company without requiring any professional investors and without modifying your cap table. You've done neither.

TinySeed calls itself "The First Accelerator Designed for SaaS Bootstrappers", so perhaps there is a schism in the definition.

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

#92

Post by codegeek »

lmeyerov wrote: post #82
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…

Important for others: Some loans do not extend this way and thus company bankruptcy (US) can protect you, so just opportunity cost. But the terms are generally bad, and why firms like tinyseed exist, esp. once revenue starts growing (though at that point you can potentially get a SAFE at better terms...). Money is so sensitive! A Google millionaire bootstrapping on surveillance savings or a doctor taking favorable lo…

I hear you but most small business loans try to push you for personal guarantee. You can fight it but it usually is tough unless you have real physical collateral in the business which is not the case for software companies. I have talked to Bankers who told me that unless the business is brick and mortar with inventory and machinery or real estate, they cannot give loans without personal guarantee even SBA backed loans.

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

#93

Post by cj »

threeseed wrote: post #89
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 VS "VC road" is much more nuanced Sure. But don't try and redefine what bootstrap means. It means building your company without requiring any professional investors and without modifying your cap table. You've done neither.

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 services has to come from somewhere.

Bootstrapping is an operational mentality IMO.

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

#94

Post by threeseed »

cj wrote: post #93
threeseed wrote: post #89

Earlier quoted context omitted.

> bootstrapping VS "VC road" is much more nuanced Sure. But don't try and redefine what bootstrap means. It means building your company without requiring any professional investors and without modifying your cap table. You've done neither.

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).

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

#95

Post by chinathrow »

codegeek wrote: post #61
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…

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).

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

#96

Post by btown »

jasode wrote: post #55
btown wrote: post #43

Earlier quoted context omitted.

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-…

>, it's really important that the tech community define "bootstrapping" as [...] With TinySeed's round at "$120k for the first founder, $60k for the second, and $40k for the third" ( https://tinyseed.com/program#program-faq ) this is very much along those lines. But when YC invested $120k for 7% equity, we typically didn't call all those startups like Dropbox/AirBNB etc "bootstrapped companies". And $180k for 2 found…

You're eliding the most important part of the definition IMO: a plan to reach profitability with the initial investment alone. YC never expects its companies to become profitable with their investment alone, nor should it - it's designed for growth companies that will receive multiple rounds of funding over time!

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

#97

Post by floridageorgia »

@daolf and team: Congrats on this significant milestone and thank you for being so candid about your growth journey.

I'm a bootstrapping founder, have a question about your amazing blog. Love the scrolling table of contents on the left and title/cta that appear on the top as you scroll. Do you mind sharing what cms/theme you use for your blog?

Unless I missed it completely, a suggestion I have for your blog is to have a search feature.

That said, genuinely inspired by your story and grateful for your transparency on how you made it happen. All the best!

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

#98

Post by jasode »

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).

>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 the hook to pay back the loans. (Barring drastic options like filing personal bankruptcy.)

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

#99

Post by [deleted] »

floridageorgia wrote: post #97

@daolf and team: Congrats on this significant milestone and thank you for being so candid about your growth journey. I'm a bootstrapping founder, have a question about your amazing blog. Love the scrolling table of contents on the left and title/cta that appear on the top as you scroll. Do you mind sharing what cms/theme you use for your blog? Unless I missed it completely, a suggestion I have for your blog is to hav…

[deleted]

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

#100

Post by floridageorgia »

codegeek wrote: post #61
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…

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…

My 2c as a bootstrapping founder (who has not taken outside money): I don't think there is any virtue in funding your business with your own money. Call yourself bootstrapped or funded, what ultimately matters is that the business survives and thrives.
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