Last month, Chicago Inno published an article on why some startups choose to bootstrap rather than raise venture capital. Although I work for a venture capital group and spent most of my career working in startups that have raised venture capital, I’ve also worked in a startup that bootstrapped. Each strategy for scaling has its own benefits and compromises, and either mode of operation can be an excellent choice for a company, depending on the business’ dynamics and goals.
Not debating the merits of either funding approach, something that stood out to me in the article was this line: “Venture capital can do many things for a startup … But what does it take away from startups and their founders? Board seats, autonomy and equity, which has an impact on the amount of cash founders take home when their startup is acquired or goes public.”
This sentence highlights the emphasis that we in Chicago place on the importance of equity and its benefits to founders, as opposed to extending those benefits to a startup’s employees—especially early employees who took a lot of risk on an unproven company.