To Raise or Bootstrap?

Should you raise money or bootstrap your business? 

I get that question a lot, and my journey with Wistia has shown me that there’s no one-size-fits-all answer.

When Eric Paley from Founder Collective and I connected at the Nantucket Conference, it got me thinking about that all-important question all entrepreneurs face.

Should you raise money or bootstrap your business?

Eric pointed out a fatal issue he sees over and over among companies that have achieved product-market fit and go the V.C. route: bad capitalization. 

Many raise funds but burn through that capital too quickly, chasing inflated growth expectations without a solid foundation. This creates a vicious cycle where the only option seems to be to burn even faster to meet unrealistic targets. 

In the cases Eric describes, there’s a different question entrepreneurs should ask themselves when deciding what route they want to go. 

Are you raising money to search for growth or to serve growth?

Searching for Growth: If you’re still figuring things out and you can’t fund your venture yourself, it can make sense to seek external funding. In that case, raise the smallest amount possible and give yourself four to five years to find your direction.

Serving Growth: Once you know your strategy, how you use that capital becomes crucial. Eric says companies should use funds to fulfill real demand, not to search for it. If customers are pulling your product, you’re building a sustainable growth engine.

One of the most critical points Eric made is about controlling your burn rate. As ambitious founders, it’s easy to chase every opportunity, but overfunding can lead to reckless spending. Instead of compounding value, excessive capital usage can destroy it, diluting returns for everyone involved.

The Takeaway

Are you searching for growth or serving growth? Do you already know how you are going to spend it?

Building a capital-efficient business is hard. It is also incredibly rewarding. As you find ways to scale and hone your craft, you will find more ways to spend money and build your own confidence in the types of opportunities you are best suited to try. 

Ultimately you want a business and a strategy that you are uniquely suited to execute against. And when you can find those opportunities, you’ll have the option to fund the business the way you want.