When I meet with other entrepreneurs and they learn CB Insights is bootstrapped (or more appropriately ‘revenue-funded) and going to be 30 or so folks in the near future, the reaction is generally “that is awesome” or folks will say stuff like “no investors to deal with must be nice”.

I think like many things entrepreneurial, bootstrapping also gets romanticized.

But bootstrapping can suck as well. Here’s why:

1. Revenue was not there day one – We weren’t always almost 30 folks and growing quickly. We started as 3 with no customers, a shitty office and nothing more than a naive belief we might be able to build something folks want. And for many months, nobody wanted what we were selling.
2. Slower growth – You grow more slowly especially in the beginning. You cannot spend ahead of demand. We earned revenue and then hired after. That means you cannot spend and assume that lifetime value of customers will eventually be more than customer acquisition cost.
3. Distractions – While we wanted to always focus on the product and customers, in the beginning, we had to also think about consulting and other revenue sources to focus on survival. These are distractions which you’d rather not have in the beginning when you’re trying to grow, get product-market fit, etc.
4. Harder to recruit – Right or wrong, there is some portion of the talent pool who care that a company is “venture backed”. While that designation means little given the success rates of VC-backed companies, it does matter to a certain segment of folks out there who’ve bought into the venture industrial complex.
5. No salary – Watching my personal savings get depleted every month is not fun. But it has been part of our process.
6. Validation – Raising money often can be seen as great validation of the business, the team, etc. It gets celebrated in the media and so may generate press as well.  We’ve seen VC-backed companies come into our space directly or adjacently and get a lot of fanfare.  They’ve all died or flatlined but at those moments, it can make you second guess yourself.
7. It’s lonely – While there is a ton of advice out there about how to raise money, navigate term sheets and about growing a business that has cash to acquire customers and which can worry about lifetime value (sometimes in the abstract), there is a lot less for revenue-funded entrepreneurs in terms of content or even events.  Sure – there are events for folks building lifestyle businesses, but that is not what we’re building.
8. People think you are thinking small – The good old pejorative “lifestyle business” can get old.
9. More stressful – For many of the reasons above and because you have to meet payroll every month based on “what you kill”, bootstrapping is more mentally stressful than having the peace of mind to pay someone from funding raised.

As I look at the list above, a couple are just mental hangups that I’ve had to get over and use as motivation (6, 8).  The rest are facts of life, but the pros of bootstrapping (being funded by customers) at this stage far outweighs any negatives.

Once you reach a scale (or mini-scale like us), most of these become non-factors as we’re seeing recently.  We’re seeing awesome talent in our pipeline, the fact that we have customers and tons of press is validation enough, our old consulting stuff is all gone and I don’t worry about making payroll like I once did.

But bootstrapping is definitely far from sexy.