14:05

Should Your Startup Bootstrap or Raise Venture Capital?

Name: Should Your Startup Bootstrap or Raise Venture Capital?
Uploaded: 2024-07-20T21:48:05.272Z
Duration: 14 min 5 s
Description: The vast majority of businesses should not raise venture capital, and VCs are not interested in investing in most businesses. Starting a VC-backed company is extremely hard, not the best way to get rich, and analogous to making the NBA. Bootstrapping can produce highly successful lifestyle businesses (e.g., $30k–$50k/month with minimal maintenance), and the decision is revisit-able.

From Y Combinator · Published Jul 20, 2024 · Watch on YouTube

TL;DR

The vast majority of businesses should not raise venture capital, and VCs are not interested in investing in most businesses. Starting a VC-backed company is extremely hard, not the best way to get rich, and analogous to making the NBA. Bootstrapping can produce highly successful lifestyle businesses (e.g., $30k–$50k/month with minimal maintenance), and the decision is revisit-able.

Key insights

Most businesses started each year are not VC-funded; VC-funded businesses are a “weird outlier freak occurrence” (single digits or <1%).
VC as a product invests only in opportunities where the investment could be worth 100x–1000x; putting jet fuel into a non-high-growth business makes everyone lose.
Shark Tank deals are generally not VC-backable; watching Shark Tank creates a false reality about the VC industry.

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