Bootstrapping vs VC funding–a quintessential SaaS question. Particularly over the last few years when tough economic conditions and scarce capital put the spotlight on bootstrapping. But with VC firms like Balderton, Accel, and Frontline Ventures raising funds of $1.3B, $650M, and $250M respectively in 2025, the tides could be turning again.

The classical thinking is that VC funding helps you grow faster (operating at a loss), while bootstrapped companies grow slower as they are spending less. 

But this certainly isn’t always the case. Capchase found that SaaS startups with between $1M and $15M of ARR saw nearly identical levels of growth, on average, regardless of whether they raised venture capital. The report showed that from June 2022 through May 2023, venture-backed SaaS startups grew 42.8% YoY, compared to bootstrapped companies, at 44%.

With fewer resources, bootstrapped companies tend to find more innovative and profitable ways to grow than VC-backed peers, and this can lead to rapid early growth. 

Just in the last 12 months, I’ve spoken to bootstrapped founders who grew to $1M ARR in just four months (Flodesk), who scaled from $10M-$23M ARR in two years (Lempire), and who built a 600 person company with a revenue growth rate of 50% (Jotform), and more. 

Whichever route you’re taking, there’s a clear case for it in 2025 and lessons to be learned from those successfully bootstrapping high growth SaaS.

Bootstrapping defined

Before we go into the details of how to bootstrap your SaaS startup, it’s worth taking a quick look at what, exactly, it means.

Bootstrapping refers to the process of building a business from scratch without external capital investment. This process usually means using your savings, money from friends or family, or what you’ve earned from your first sales to establish and grow your venture. 

The term “Bootstrapping” is born from the English phrase “to pull yourself up by your bootstraps”. Simply put, this means improving your situation without any outside help.

A well-known example of a bootstrapped company is GoPro. Its founder, Nick Woodman, initially bootstrapped the business with only his personal savings and a $35,000 loan from his mother. Another prominent example is email marketing service MailChimp, which was entirely self-funded and sold to Intuit for $12B in the last quarter of 2021.

The SaaS industry is ideal for bootstrapping for various reasons:

  • The market is growing rapidly as more and more businesses see the value of these products and services. 
  • SaaS products are relatively simple to build and distribute, and open-source developer tools and software can simplify the process and keep costs low. 
  • An increasing amount of startup advice is available for free (also on www.saastock.com), making it easier to avoid common pitfalls and build a successful SaaS business. 
  • SaaS businesses usually have a predictable revenue model. So, entrepreneurs can plan their business trajectory and have a clear idea of the time, resources, and costs required to launch and grow their businesses. 
  • The overhead costs of creating most SaaS products are low compared to production costs in other industries. 
  • In the early stages, it’s easy for founders and their teams to work remotely with minimal resources and overheads.

Bootstrapping pros vs. cons

Whether you choose the bootstrapped route or take funding, no business model is perfect. All the different methods of acquiring startup funding have advantages and disadvantages which are critical to understand. Bootstrapping is no different. 

Let’s take a look at some of the pros and cons:

Pros

  • Maintaining control and ownership

Maintaining control is one of the main reasons many founders go the bootstrapping route. As a bootstrapping entrepreneur, you’re in control of all business decisions. You won’t have to make decisions to satisfy the needs of others, and there’s less pressure to succeed in specific, set timeframes.

  • The potential for greater long-term rewards

By bootstrapping your venture, any profit made is yours. Venture capitalists or other investors won’t be waiting in line to reap the rewards, too. If you’re bootstrapping and you’re a single founder, you’ll own 100% of the business, and no one else can claim a piece of the pie.

  • Founders can focus on customers, not fundraising

Fundraising can cause strain for founders. The process generally takes great effort, can be costly, and may cause delays in getting your business off the ground. Bootstrapping bypasses all of this hassle. As the bootstrapper, you can launch your business as soon as you’re ready and focus primarily on your product and serving your customers rather than trying to impress investors.

  • Motivation to turn profitable

Linked to the above point is the importance of turning profitable as soon as possible to ensure your business’s survival.

As a bootstrapper, you’ll need to create a business model that translates into a positive cash flow and profits fairly quickly. This goal, in turn, creates a drive to build a product with excellent product-market fit (PMF). It also promotes good spending habits, which could persist throughout the life of your business. Lastly, bootstrapping can drive innovation and creative problem-solving.

“The lack of money makes you more pragmatic and makes you manage your priorities in a better way,” says Carlos Hernandez, CEO and Founder of Quaderno.

  • A clear vision

Business founders usually have a clear idea of where they’d like their companies to go. But be warned: this vision can become diluted and disputed as you add more people to the mix. Achieving your long-term vision may become less important as you chase short-term metrics to keep investors happy. As a bootstrapper, you can keep your vision front of mind as you move through the stages of building your business.

Cons

  • Founders have to handle it all

Being a bootstrapper comes with much responsibility, multiple roles, and hard work. “Being a founder, you need to know a lot of things,” says Kovai CEO, Saravana Kuma. “You need a level of expertise in marketing, you need a level of expertise in sales and go-to-market strategies, and you need to keep up with everything that’s happening. You need to give customer support and […] there are a lot of buckets you need to fill. The first thousand demos of the product I gave myself.”

Bootstrapping is definitely hard work, but the good news is that you’ll gain many valuable skills along the way.

  • Missing out on support from investors and financiers

Going it alone could mean you miss out on the valuable guidance, expertise, and experience investors can bring to the table. Investors often have strong networks and bring a third-party perspective to major business decisions. Without this input, there may be no one to critically assess what you’re doing and whether the decisions you make are best for your startup’s growth.

Teamwork’s Co-founder and CEO, Peter Coppinger, recognises the value that can be found in investor support: “We probably wouldn’t have made [the huge tactical mistakes we made along the way] if we had better oversight.” 

On the flipside, you’ll be forced to build your own networks and learn through experience if you bootstrap.

  • Increased financial strain and risk

Bootstrapping comes with a high level of personal financial risk. Using your own money dramatically raises the stakes for success. A bootstrapped business can also be weaker than a well-funded business and more at risk for insolvency. On top of this, the initial investment may not prove enough for the company to become successful.

  • Not having to put in the groundwork for investors

Preparing pitch demos, budgets, and projections for investors is very useful for founders as it helps build discipline and rigour. You simply have to take the time to think everything through and plan how you’ll grow your business in preparing your pitch.

Chris Hall, CEO of Bynder, agrees that the investor search can be a positive experience for entrepreneurs: “It’s such a good experience just talking to these guys and understanding what metrics are important to them. You’ll be getting great feedback about your product [and] your team. It helped us mature as a company and helped us understand the metrics we should be measuring. […] These guys are going to be some of the smartest people you’ve ever met, and it’s a humbling learning experience.”

  • Losing out on growth opportunities

The main reason why many entrepreneurs go out to fundraise is to scale their businesses as quickly as possible. Without outside capital, it can be challenging to promote visibility, find new customers through marketing, and improve what you offer your customers to promote fast business growth.

However, it’s worth remembering that it’s always an option to take on funding later in the game, once you’ve scaled your business as far as possible with bootstrapping.

4 steps to bootstrapping success

From my conversations with bootstrapped founders at all stage, all over the world, there are some clear steps and principles that will increase your chances of success. Below are four steps with examples from companies include MuckRack, Jotform, Flodesk, and lempire.

1. Ensure financial discipline

It seems obvious, but focusing on cash flow is essential to successful bootstrapping. When bootstrapping Muck Rack to $50M ARR, Co-Founder and CEO Gregory Galant kept a spreadsheet with forecast cash flow for every month and never bothered looking at anything like GAAP-based revenue or EBITDA. Up until $10MARR, he never had less than 2-3 months of expenses in the bank, trained his team to be frugal, always said no to budgetary overspend, and used every trick in the book to keep expenses low (even sharing hotel rooms for conferences). 

On the flip side, Adam Robinson, Founder & CEO of Retention.com, told me that probably his biggest mistake as a bootstrapper was losing all financial discipline and “spending like a sailor.” 

It put a strain on the business and set a poor example to his employees who also overspent. A standout moment was  hiring 50 expensive people in around 60 days, without the processes to support them. Since then, things have changed and one of his most successful cost-saving measures to date continues to be using Linkedin content to spread awareness of his product with buyers for free.

2. Focus on the customer

Instead of spending on costly marketing campaigns, successful bootstrappers acquire and retain customers organically. Martha Bitar, CEO of Flodesk, hustled everywhere to get customers. She first asked everyone she knew for feedback on her product even if it wasn’t relevant to their business. She then shared product screenshots on Facebook, cold called, cold emailed, joined forums and even knocked on neighbours’ doors asking if they ran a business. Her goal was to schedule 12 customer interviews per day (of which 9-10 would show up) and in each 15-minute interview, she’d then ask for three more referrals. 

In the spirit of cost efficiency–few marketing tactics are as effective as word-of-mouth. Aytekin Tank, who bootstrapped Jotform to 600 people, is a firm believer in offering free products (with limited use) that get people talking. This approach not only helped customers start using his product, but created goodwill for the future and generated word-of-mouth as users could easily recommend a free product to their friends. After launching the paid version, he got 500 subscribers the same year.

3. Build your team in the right way

Hiring is one of the most expensive SaaS outlays, so bootstrappers tend to operate in small teams for as long as possible. But to sustain your growth, you eventually need to expand your team size. 

Jotform used an alternative team structure to ensure innovation and maintain company culture as they grew from five to 600 people. At 15 people, Jotform set up small cross-functional teams that worked and built specific projects together. At 50 people, Jotform split into three teams – effectively three start-ups within the company – that took on delivery for whole projects. Today, there are 100 teams at Jotform that follow this model with each single team capable of building a product from scratch, releasing an MVP, getting feedback from users and making a successful product. 

For Guillaume Moubeche, who grew Lempire to $23M ARR without funding, surrounding yourself with smart people is key to bootstrapping the first $10M. But, at the start you have no ‘street cred’, so he recommends hiring people with a good mindset and an internal drive to learn. Then as you grow, meet with as many people as possible, pinpoint the exceptional talent, keep in touch with them and nurture the relationship (i.e. help them in their job), so when the time’s right, you can bring them on board.

4. VC funding down the line

Not everyone bootstraps forever. Ok, Atlassian managed to raise a $460M IPO without taking venture funding but for many bootstrappers, external funding becomes more attractive later down the line. Especially if you get funding when you’re already profitable as then VCs become a very different partner. 

According to Guillaume, the key is working out what’s best for your growth plans and making sure you get good terms. In his view, the terms of the deal are 100 times more important than the amount raised.

Don’t go it alone – sign up for SaaStock Founder Membership

There’s no need to tackle the bootstrapping of your business alone. SaaStock is here to help. An easy way to get access to a wealth of information on how to make your business a success is by joining our SaaStock Founder Membership. As a member of this private community of founders, you can interact with peer groups, be part of a global network, and get access to our workshops and resources. Our experts and community will provide you with the support and advice you need to successfully bootstrap your business.