At what point do you go out and raise VC money as opposed to bootstrapping?
You bootstrap, always.
You raise VC, only when needed and for the right reasons.
Bootstrapping and funding via revenue is the preferred pathway that allows founders to retain their equity and not waste (a lot of) time chasing investment.
VC funding can/should be considered mostly in 2 cases:
- Your startup is growing, making money and getting funding would allow you to accelerate growth and expansion. Basically, growth money that is taken to grow further, at scale.
- Your business requires a solid initial investment (research, builds, etc. Think pharma, medtech, Tesla, spacetech etc.) that should yield significant revenue once launched, even if 5 years or more from now.
A third option can be to save your company and get this added runway that is going to allow you to succeed. But desperation usually does not side well with fundraising…
In any case, your preferred VC should always be your customer. And funding for PR purposes (think Techcrunch article) avoided at all costs.