Bootstrapped companies becoming more attractive to some VCs
Crunchbase News posted this article recently about growing interest from some venture capital (VC) firms in bootstrapped companies. The article notes that “more than 1,000 start-ups founded before 2015 raised a pre-seed or seed round in 2021, meaning they operated without venture capital or with minimal funding for several years before raising money from VCs or angel investors.”
“One, they may have gotten through the ‘valley of death’ already, they may have achieved product-market fit, may have some revenue, so in a way they have de-risked the startup,” says Kurt Beyer, a Lecturer in entrepreneurship and innovation at the University of California Berkeley’s Haas School of Business.. “If I make an investment as a VC during the valley of death, pre-revenue, there’s a tremendous amount of risk.”
Another is the many other types of start-ups that can grow organically, and technology services like Amazon’s AWS make it easier to bootstrap, Beyer said, citing a start-up wanting to build an app, for example, doesn’t have to raise VC money to build its own servers.