Pros:
- Venture Capitalists have had prior experiences with companies in a similar situation as yours so they could give you advices and tips which works.
- If you need additional funding for the expansion or growth of your business, venture capitalists may provide you with this which of course is still highly dependent on market performance and other factors.
- Venture capitalists also have a wide network. They could help out in providing you with key staff plus they would also be helpful in managing your business.
Cons:
- While it may be relatively easy (easier than asking loan from banks, that is), it could take some time before the funds are released. So if you are looking to use VC Funding as a startup funding option and you are not pressed for time, you may consider this.
- Equity financing means that you are not at the helm of your business. Venture capitalists have a say in your business too. So if you’re the type of person who wants to control the whole operation, you might want to rethink your options.
- You would have a smaller share in the business.
Bootstrapping
Pros:
- It is simple and straightforward.
- You are in full control of your business
- You get to keep all the profits
- You’ll learn to be more self-reliant and resourceful
Cons:
- Expect to have longer hours since you’re doing all (or most) of the work
- If your business suffers financially, you’d shoulder it all on your own
- You have sole responsibility in your business. When your business encounters any problems, you would need to solve it. You also need to come up with ideas by yourself. You have no team you could depend on.
Any of these two options have their advantages and disadvantages. The thing about being an entrepreneur and having an entrepreneurial spirit is that if you are really vested in your ideas and in your business, you could transform any disadvantage and work it to your favor.
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Yeah, there are definitely pros and cons both ways. Up until this point my company is 100% bootstrapped and I like it that way for now. The biggest advantage in VC funding is the expertise that comes with it. Even if you are bootstrapped, seeking advice is an important part of business.
I couldn’t agree with you more, Garrett. I believe that whatever ways of funding any businesses opt for, seeking advice is definitely important. I think that’s why more busness owners are active on social media sites and other business networking sites as well. Not only as an asset to their marketing efforts but as a way to connect with people who have been on a similar situation.
I suppose it depends on the business, but why not just lead one into the other? Bootstrap it until you reach the tipping point of low capital to high demand, then either use your current profits to move yourself forward, or if thats not possible seek funding with well rounded stats in hand.
This way the kinks can be worked out of the system, and you can see if the system works at all in the first place.