Bootstrapping or raising funds? (As an early-stage SaaS)

Should you bootstrap or raise funds? An eternal dilemma. So let me answer it for you.

Bootstrapping or raising funds? (As an early-stage SaaS)

Bootstrapping or raising funds?

This is an eternal dilemma for many SaaS founders.

So let me answer this question.

For the context, I spent the last couple of years helping 20+ SaaS companies get millions in ARR through content marketing and other strategies.

Some companies were bootstrapped. Some got millions in Seed or Series A funding.

At the end of the day, when you have a dilemma of whether you should or not raise funds, ask yourself the following questions:

“What kind of product do I want to create? What kind of solution I’m offering to my market?”

So, why it’s so important to answer these questions?

Let me tell you.

If you’re going to drastically disrupt a specific category (like what Zoom or Canva did), you certainly need funding.

In that case, you need to have massive funding and resources at your disposal.

But on the other hand, if you’re trying to solve a specific issue for a particular group of people inside one existing market, then funding is not something that you necessarily need. Even without funding, you can bootstrap this kind of SaaS to over $10m in ARR (if the TAM is big enough of course).

For example, I spent almost two years working as a head of content at lemlist. We brought the company from 0 to $3m in ARR without any funding during that time. Today, they passed the $10m ARR mark and are valued at around $150m while maintaining hypergrowth.

So what did lemlist do? We saw a gap in the current offering and just created a solution that’s way better than any other tool on the market.

That was more than enough to reach all of our ambitious milestones. with good marketing

They didn’t need funding for that.

Of course, the growth would probably be more extensive if they raised some funds, but raising funds was not essential.

At that growth pace, I would never sacrifice my ownership inside the company.

So at the end of the day, everything comes down to the pros and cons.

As a bootstrapped company, you’ll sacrifice a little bit of the YoY growth for the full ownership of the company. Also, no people above you will dictate how you should build your company (believe me, I saw situations where investors ruined companies).

As a funded company, you get enormous resources at your disposal, but for the sake of ownership and decision making.

The growth would be bigger (if you’re executing correctly).

But is it that important?

So, ask yourself what kind of solution you’re creating, and you’ll have the answer on whether you should or not raise funds.