How I went from chasing unicorns to bootstrapping
Why bootstrapping is better than raising venture capital.
Hi, it’s Melissa, and welcome to “your founder next door”, a bi-weekly column with relatable stories of my journey bootstrapping eWebinar to $5m ARR. No BS, just straight-up truth bombs on what it’s like to build a company without an abundance of resources or friends in high places.
The story in this newsletter is based on the first episode of my podcast, ProfitLed: Bootstrapping vs Venture Capital. If you’d rather listen to this story than read it below, you can do so by finding ProfitLed on your favorite podcast app, or going here.
Backstory 👩🏫
I’m a 3rd time bootstrapped founder who has had the privilege of growing a startup to profitability and acquisition without taking venture capital, something that has ultimately given me the freedom to live the life I want to live, on my own terms.
(By the way, sharing stories and lessons from my last 14 years in startups is what I do weekly on LinkedIn and Instagram).
Along my journey, however, I saw how the allure and perceived reality of building a venture-backed company drove many of my founder friends down a path that turned out not to be true to who they are and what they want. It’s a path I tried and luckily failed to take myself.
I want to be clear here…there is nothing wrong with venture capital, but it’s not for everyone. In fact, it’s only right for a very few.
Today, I want to share my own story of bootstrapping and why I think more spotlight should be given to non-venture backed founders who have forged their own path to success.
Before I started my first company in 2011, which built real estate apps for property developers, I worked in a number of different industries, always in sales and business development. The last job I had working for someone else was at SAP, where I was part of their large enterprise inside sales team.
My second company, Spacio, was also in real estate tech (or proptech as some call it). It was acquired in 2019 after I ran it for 5 years. I’m currently the CEO and Cofounder of eWebinar, my third company.
Back when I was running Spacio, I moved to New York from Vancouver to grow my business. New York is the real estate capital of the world so it made sense for me to be there. It’s the only city where they make TV shows about real estate agents and people actually care. It’s pretty wild.
It was in New York that I was first exposed to a vibrant startup community where everybody seemed to be motivated, ambitious, and chasing venture capital.
The problem: Thinking I needed VC to succeed 😒
As a sales and revenue driven founder, I didn’t understand the concept of venture capital at first. But I was meeting all these new people and they were talking about their raises and asking me how much I was raising as if that’s something I was there to do. Up to that point, my companies had been funded by my own capital, government grants, friend and family loans, and revenue. I hadn’t even thought of raising capital as an option to build my company - maybe that sounds naive, but that just wasn’t the world I came from.
Being surrounded by people who validated each other’s success based on how much capital they raised and from which VC made me feel like that’s what I needed in order to build a real business, but also to be accepted by this new community in my new home. It felt almost like an initiation process that would give my startup permission to succeed. Of course, I wanted that validation too, I’m human…but especially because I was struggling hard at the time to get my startup off the ground. I wasn’t even sure if I was doing the right things so I wanted other people to think I was onto something too, or so I thought…
Going back to my first startup for a second…that company was a product company turned agency that built interactive brochures on iPad for real estate developers who were selling new development projects. We started as a single product, but then everyone wanted to customize everything and since we were bootstrapped and needed money, we said yes to a lot of things and soon we became a custom apps company.
Anyone who’s run an agency before knows how tough that business is. I was on a hamster wheel of constantly chasing both new sales and old invoices. It was stressful and I hated that life.
After 4 years, I decided to shift away from that and build one product that we could offer to everyone instead of building different apps for different people, and that’s when I started my second company, Spacio, which was my first foray into SaaS. Spacio was (and still is) an open house check-in solution for residential real estate. We sold the software to brokerages and franchises as an enterprise-SaaS offering.
In order to fund Spacio, I took out a loan against all the revenue we had in my first company and put everything into a new bank account, thinking that would last me a while. At least long enough to get the product to market and generate enough revenue to sustain our small team. I was pretty wrong about that. To say that I underestimated how hard it would be to get a product off the ground is in itself an understatement. Because Spacio was my first product startup, I really didn’t know what I was doing. It took 2.5 years of trial and error before we found the first person to pay us $10!! And that got me into an incredible amount of debt.
Which is why when I heard about this idea of venture capital, it sounded pretty compelling! You mean someone would give me money so I could build my company without worrying about paying the bills? Yes, please!
Why I pitched VCs and failed hard 🦄
I was tired of being in debt and having no money to live a normal life, and this seemed like a way out. I moved to New York at the lowest point of my career. I was burning a ton of cash iterating on our product, we hadn’t found product market fit, rent was astronomical. For 2 years, I didn’t have more than $100 in my account at a time. I would pay everyone else before seeing what was left and would pay myself just enough to cover rent and basic expenses. I’d go to startup events for food, and for a long time, I’d have one meal a day and time it properly so I wouldn’t get hungry at night. Thinking about it now, it was an insanely difficult period and the only thing that kept me going was naivety from the lack of experience and the fear of regret. Maybe some of you can relate to this.
(PS. If you’d rather listen to this story than read this article, you can do so by going here.)
I’m not sharing this because I want to glorify suffering, I definitely do not believe there’s glory in failure. I’m only sharing this to give you an idea of my desperation at the time and why I was willing to try anything for capital. In fact, looking back, a lot of what I had gone through was the result of mistakes I made early on in my journey because of inexperience and stubbornness. Things like not validating ideas, being overly confident, spending too much without forecasting, things like that.
I don’t regret those mistakes. There’s no way I could have known better. That was my path and I did the best I could with what I had — but with so many resources and communities out there now, I’m sure a lot of the same mistakes could be avoided today.
It wasn’t all bad though. Because I was living in New York City, one of the greatest cities in the world, and it was during that period that I met David, my now life partner, who would become my cofounder of eWebinar years later.
Back then, I tried pitching to VCs but I was never successful. I think in total I had about 20 conversations. To be honest, the product and business that we had was not venture scalable. But, that wasn’t the biggest problem.
The biggest problem was, I found myself telling VCs a big story that I didn’t authentically believe (and that’s probably why my pitches were never very good). I was telling them a story that I thought they wanted to hear so they would give me money. A story that was carefully crafted by other people who helped me with my pitch. A story that followed a standardized pitch deck that you can download off the Internet. I blame Guy Kawasaki! (PS. If you don’t get this joke, you’re probably too young.)
I didn’t want to be a unicorn, I didn’t want to IPO, I didn’t want to grow my product beyond what it was. I just wanted to get out of the debt I was drowning in and build a business that would give me a good salary and support my team. I was in survival mode for so long that I didn’t have the headspace to think beyond that. I just wanted a break from it all. I hadn’t even thought about selling the company. I didn’t think about my company as a “startup”, I thought about it as a business. I didn’t know startups were supposed to be designed for acquisition - this was something I’d learn later on. When VCs asked me questions like, “What’s your exit strategy?” I couldn’t give them a polished answer.
Realizing revenue > everything 🤯
My experience made me wonder how many others were out there like me telling stories that they didn’t believe. When you’re surrounded by so many founders and VCs you look up to telling you, “This is how you should be building your startup, you need to have a billion dollar exit otherwise you’re not ambitious enough…” you start to believe that. When you tell a story out loud every single day while raising capital about how you’re going to be the next unicorn and you have a path to get there, you start to believe that too even if it’s not what you really want.
Looking back, I guess I didn’t really think about what I wanted because I let other people dictate that for me. The line between my wants and everyone else’s wants became fuzzy. I hope that makes sense. I just wanted to do what they were doing too. The dopamine hit you get from being part of something bigger, and being accepted in a startup community is intoxicating and hard to ignore. It makes you feel like you’re “killing it” along with the rest of them and on your way to achieving success “the right way.”
While I understand where this venture money cult culture comes from, it never really resonated with me.
And because I wasn’t able to raise venture capital, I continued to focus on driving revenue in order to sustain my business.
Slowly but surely, we were doing better and better, closing bigger deals and really getting our name out there in our industry. It was still a struggle, but we were finally on track to profitability.
Joining and quitting an accelerator within a week 🙅♀️
Then all of a sudden, VCs wanted to talk and accelerators were inviting us to join.
At some point, I actually did join a real estate accelerator that promised $30k in exchange for 5%. We didn’t need the money anymore but it was my last-ditch effort to join the venture club. It was obvious from the first few days that the sole purpose of the program was to get us demo day ready so we could raise more capital at maximum valuation.
That was when it all became so clear to me: venture backed companies have an equation. They’re driven by raising more capital at a higher valuation than the last round so that they can grow and then do it over again, and again, and again.
This equation was very different from the one I was working on. I was selling more product so we could make more money to build a business without relying on anyone else. I was on a completely different path. I was no longer in survival mode, and didn’t care about all that superficial stuff anymore.
After working so hard for so many years (on my first startup and my second) and bringing my company back from the dead when nobody would fund me, I wasn’t going to give away 5% for $30k. I quit that accelerator in the first week and continued to focus on my business without any distractions. It was good I did, because Spacio was acquired within 12 months of that experience - and it would have sucked so bad to give away 5% of our exit to an accelerator when we did almost all of the work and sold the company on our own.
The biggest benefit of profitability: Complete freedom 💰
The day we hit profitability was a really, really great day. I finally felt like I could breathe. I decided to do something for myself after almost a decade of doing things for other people. I decided to leave New York and nomad full time, to experience the world while building my startup on the road. I was able to do that because I was calling all of my own shots. I could start designing the life I wanted to live. I was working as much or as little as I wanted, taking holidays when I felt like it, and we were growing the company at our own pace. Nobody was telling me what our growth rate had to be and I didn’t have to worry about anyone else’s opinion. It was awesome.
Turns out, the only people who need to give you money are your customers.
In 2019, after 5 years of running Spacio, the company was acquired for 7-figures, giving myself and my cofounder a life changing exit that we would not have otherwise gotten had we been venture funded because the amount would have been too small. Any VC would have pushed us to keep growing it to at least an 8 figure, or the 9 or 10 figure exit that I had promised in my pitch. That exit was what allowed me to move on from an industry I was tired of working in after a decade and start eWebinar, the company I’m running now, 2 months after selling without needing external funding and fully on my own terms. I can’t even imagine being robbed of that experience and the life I’m living now by being stuck in some kind of arrangement with an investor.
As I was living life and enjoying my new-found, earned freedom, my founder friends who were venture backed kept telling me how stressed they were about needing to raise the next round and how hard they had to push to show consistent growth. Time and time again, they told me they would bootstrap their next company instead. It made me think a lot about how much we don’t know about running a venture backed startup and of all the hardships that come with it.
On the flip side, I have seen founders who are so well connected and great at raising capital (which is a skill of its own by the way)...raise millions of dollars on nothing but a deck, and then shut down the company as quickly as they start it because they changed their minds. These are people who do that again and again because they’ve figured out that game - some ultimately make it, but most don’t.
How the media influences our idea of success 📺
Meanwhile, the media keeps reporting on the starting of these companies but not on their ending. They report on acqui-hires as if they’re meaningful acquisitions, making everyone else green with envy.
It was always difficult for us to get the media to feature us in anything, by the way. Whether it was a small industry publication, or a big tech blog, I could barely get journalists to respond. When I did get a response, they were more interested in how much money we had raised than what we were doing because that was how they judged our success.
It didn’t matter that we had a real business that was changing the industry, it didn’t matter that our company was generating more revenue, or acquiring key customers; it would have been more media worthy if we had raised capital from a brand name VC. It used to bother me a lot, until I realized the media’s measure of success was irrelevant to mine. What they care about is ad revenue, eyeballs, and clicks, and a non-funded early stage startup is not going to get them those things. On top of that, I was already experiencing success on my terms, and I didn’t need anyone else to see that to make it real.
Unless you’re part of the top 1% who’s venture backed, experiencing hyper growth, or have had a major exit, it’s almost impossible to get featured in the media, and that’s unfortunate, because promoting the stories of the other 99% is something that would actually help the 99% - which are the majority of founders. Those are the stories we can all relate to, those are the stories that are real. I hate how the media hyper focuses on the 1% and popularizes a practice that doesn't reflect a realistic view of the startup grind most people experience.
I think this is why venture backed companies are perceived so differently. Once they get funded, their peers tell them how great they are, and then the media starts telling everybody else how incredible their idea is before actually building a business.
It’s a real problem with venture capital: getting funded can give you a false sense of accomplishment. Thinking you’re doing great when you don’t have much to show for it yet can send you down a path that you might not recover from.
Again, I’m not saying that all venture capital is bad, it’s just not for the majority of businesses. Most founders should not be following that model to build their startups.
Defining your own idea of success 💪
I don’t think enough founders ask themselves, “What kind of life do I want to live that would make me happiest? What kind of business can I build to support that? What would raising institutional capital mean for me and my business?”
If you’re going to spend the next 5-10 years or more on your business, these are all really important questions to ask. Your business is just one part of your life while your happiness is the foundation for everything.
Let’s face it, this gig is HARD. If you are not doing something that feeds into your happiness, then everything else becomes that much harder.
Everything I’m telling you took me 10 years to fully come to terms with. When I was finally comfortable with doing business my own way, I started meeting so many other founders like me who have had similar experiences. I know many founders who raised venture capital before and vowed never to do it again, running profitable companies with small teams, paying themselves well and minding their own business. I know founders who work less than 5 hours a week, making over a million dollars a year, and have never raised venture capital. That sounds like a pretty great life to me…
Meeting other bootstrapped founders from all walks of life taught me that while venture backed companies are all pretty much the same, every non-venture backed company is unique because you get to define your own rules. There are so many of us, building startups that don’t get the attention they deserve because we didn’t get the VC stamp of approval. That approval is irrelevant to the worth of a founder and the success of their business.
The biggest lesson I learned through all of this is:
The only definition of success that matters is your own.
Reflections 🪞
I want founders to know that it’s okay to not want the unicorn exit, and that it is enough to build your startup on your terms as long as it makes you happy. I want to show them the different faces of success. I want people to realize that your success is a very personal thing. You shouldn’t let your peers and the media define what success means for you.
This is why I share stories and lessons from my founder journey (here on your founder next door, and on LinkedIn), and those of others. These are the stories that I wanted to amplify because they need to be told. I want to show founders around the world that it can be done, and that you are not alone.
It’s why I felt compelled to start my podcast, ProfitLed, a podcast by and for founders brave (or crazy) enough to grow their businesses to profitability without venture capital. I want to highlight all the different ways businesses have been built and all the different strategies that were used in hopes of inspiring others to do it too.
There’s already too much content out there about VC backed founders and hyper growth companies. But about everyone else? Not so much. To me, these are the unsung heroes of SaaS. If only 1% of startups get venture capital, then 99% of startups are ProfitLed.
On ProfitLed, we explore the truth around how to build a company fully on your own terms and what it’s like to be able to design a life around the way you want to live as a result.
If that sounds interesting to you, you can find ProfitLed on your favorite podcast apps like Apple and Spotify.
What to expect from my newsletter ‘your founder next door’
A bi-weekly column with relatable stories of my journey bootstrapping eWebinar to $5m ARR. No BS, just straight up truth bombs on what it’s like to build a company without an abundance of resources or friends in high places.
For a full introduction of who I am and my intentions of sharing my lessons and learning on ‘your founder next door’, see: Greetings from your founder next door
Some stuff you might find interesting 👇
ProfitLed S1E1: Bootstrapping vs Venture Capital — Why Bootstrapping is Better
This is the story of my darkest entrepreneur moment from the last 13 years in startups
I moved to NYC and triggered the butterfly effect that led to the sale of my last company
Article: The only way to live the life you want is to design it
Article: Design the life you want to lead (not around the next demo)
Thank you for reading!
— Melissa ✌️
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These reflections on the freedom and autonomy you get with bootstrapping are priceless. The disproportion media coverage of venture backed startups is so misleading. Only 1% of startups (in the U.S.) raise venture capital…
Bootstrapping is the best way! 🎉
Check out my substack where I walk aspiring new business owners how to Bootstrap Your Business!