The Benefits of Bootstrapping

Sometimes, even when you’re successful as an entrepreneur, it can still feel like you don’t have a legit, “grown up” business. 

You know you have a great product or service… and your clients all rave about their results. But hearing venture-backed founders talk about their gazillion-dollar exit strategies can cause you to wonder if you measure up.

In this video, I’ll tell you about the time I found myself surrounded by VC-backed founders at a retreat.

(Spoiler alert – turns out, the grass isn’t always greener…)

Sure, as a bootstrapping entrepreneur, you might not sell your coaching business or membership site for $500 million. But you can build a business that gives you more freedom and income than most venture-backed founders will ever experience.

Here's a tale about my experience meeting a group of venture capitalists and spending time with them on a retreat, which was actually a vision quest. This memorable encounter took place right before the onset of COVID. The retreat was designed specifically for entrepreneurs and founders. Among the attendees, there were nine of us and most had venture-backed businesses, except me.

In my previous video, I talked about the two routes you can take when building a business – being bootstrapped or being venture-backed. Being bootstrapped is when you self-fund your startup; the initial money to get started comes from you, then the profits generated from sales feed your business growth. This is how I've always done it, and it's a common path for businesses in the digital content, teaching, training, online course, and membership site industries.

On the other hand, a venture-backed business is where you raise money from investors. Typically, initial funds come from angel investors, and if things go well, from venture capital firms. This is often the chosen route for businesses that require large upfront investment, like software companies. It's important to note, neither is right or wrong, they are just different paths.

When I attended the retreat, with most participants being from venture-backed businesses, I felt a bit out of place. There was this notion in my head that these businesses were the “grown-up” kind, the ones that had to raise capital, convince venture capitalists, and establish a board of directors. Add to that the fact that I was the oldest person in the room, some attendees being 10, 20, and even 30 years my junior. As an introvert, this was quite a challenge for me.

However, as the first day unfolded and we had dinner together, I found myself surrounded by everyone. They were all asking questions about my business, showing interest in the intricate details of what I do, my team, and how I operate. This was a fascinating observation for me since I initially thought these guys had the more sophisticated businesses.

As the retreat progressed, I realized that they all seemed to envy my business. Their venture-backed companies were meant to be grown and sold, but the harsh reality is that only about 10% make it to that sale. While a successful sale can lead to substantial financial gains, the entrepreneur doesn't get all of it since they had to give up equity in exchange for venture capital.

Along the journey, these founders often find themselves reporting to the board of directors, having to seek approval for decisions, and continually raising more money. All of this for a slim chance of a big payday, without much freedom or consistent income along the way.

On the other hand, my business and those similar to it, while they may not sell for billions, provide an amazing journey. They offer freedom and a steady income, which I realized was what most of these venture-backed founders desired. By the end of the retreat, I felt validated in the path I had chosen.

If you're in the digital-based business space – running a training company, online course, membership site, coaching program, or mastermind, know that it is an incredibly rewarding business to be in. I am grateful every single day to be in this business and have the opportunity to coach others in this field.

So, that's my story of meeting a group of amazing, friendly, VC-backed founders. I'm Jeff Walker, ready to conquer another week. Let's go get them this week.