With the cost of technology going down, and all the services that can be leveraged on a SaaS-basis, launching a venture is becoming cheaper and cheaper. Self-funding your business is now is a viable route, and comes with a few advantages.

That’s what we’ve done with Bubble (a visual framework to build web apps). We started our company in 2012, and have been bootstrapping for 6 years now, with a team of 6 and more than 150,000 users. In this post, I’ll try to expose how we thought about this decision and the framework we use to decide if it’s the right time to pull the trigger on a round.

Before getting into details of our thinking process, let’s start with the obvious. It’s always better to have money to grow your business. The problem, though, with raising money is that it doesn’t come for free. And I’m not talking about equity here, but more how investors’ money is changing the way you make decisions.

The main benefit of not taking external funding when you run a startup is that it limits the number of stakeholders you are dealing with on a daily basis. Without funding, you basically only deal with users, current and prospective ones.

With funding, you need to worry about your investors and keep them satisfied about how things are going. And this isn’t minor: during early stages, when you have only a few users, and likely almost none are paying, it is going to be hard not to care more about your investors, as they gave you much more money, and have more leverage on you.

This effect leads us to the rule that we’ve kept applying over the years as we’re thinking about this question.

Are the investors we are going to bring on board going to have aligned interests with our users?

This question is key when deciding whether you should take external funding. And the answer is different among different businesses. For Bubble, early conversations with investors quickly convinced us that the answer was "no." From the beginning, we wanted to prove you could build something that works at scale without code.

This idea had been tackled quite a few times before, and we felt proving this was the most important. We knew our existing users wanted that as well, since they were building their companies on Bubble. On the other hand though, most investors we talked to wanted us to get as many users as possible, as early as possible.

In terms of product management, that would mean work mostly on on-boarding, while working for scale meant working on features and performance. Very practically, every investor we talked to at the beginning of Bubble wanted us to turn entirely toward templates, while we knew existing users used us precisely because we had no template. The conflict here was obvious.

Note that this conflict does not exist for every business. If you’re building a marketplace business, in most cases, the interest of your users and your investors are likely well aligned. Sellers want as many buyers as possible, buyers want more sellers to have more options, and investors want more people on the platform. In such a case, raising external funding is a great way to accelerate.

While the rule above is pretty much the only thing we consider as we revisit our funding decisions over the years, there are a few advantages that we realized bootstrapping offers. If one of them is critical to your business, that is another plus of the bootstrapping route.

Bootstrapping is a safer way to run a business. By definition, when you raise money, you live above your means. So you are basically doomed to raise again, except if you manage to find a business model that works well enough to cover the costs you’ve been used to paying for with the money you raised. In other words, raising money increases the risk profile of your company. Bootstrapping also forces you to figure out how to make money earlier on, leading to a much less likely cash-issue down the line.

Bubble is a community-driven company. As our product requires a few hours to learn and is very open-ended, our customers often want to talk with others about their choices, and do this on our Forum. Today, this vibrant community is a very important asset of our company.

Not raising external capital actually helped us a lot foster this community. Users value our independence and the fact that users are our only stakeholders. It helped us with explaining pricing changes and makes our users realize that we need them to convert to keep growing the business. Users feel that they have a stronger voice in our decisions (and they do!).

While PR is harder with investors at first, as you don’t get early validation from the ecosystem, once you reach a certain scale and are still bootstrapped, it can turn out to be a strong asset and a major component of your brand (especially with the current resentment against Silicon Valley for involving too much money). There is something refreshing in holding to the statement: "I believe in creating a sustainable, healthy business."

As always, there are a few negative aspects with a given strategy. Bootstrapping can bring a few risks to your business, some internal and some external.

The external, competitive risks are easier to identify. If you are in a market where everybody raises money, you probably will have to revisit what I said earlier, as there is a risk to be overwhelmed by the competition.

The internal, I could even say personal, risk of not raising money is around the time horizon of your entrepreneurial endeavor. This is a bit different and I think something to really be careful about. There is a risk when you bootstrap company to run it a lifestyle business.

And this is great, if that’s what you want. But that may not be what you had in mind when you started your business. The risk here is that since things are taking longer than if you raise money, you can find yourself working on something for 10 years and then realize it wasn’t your initial vision. Make sure to revisit the decision every 6 months and not fall in a too comfortable rhythm.

This may actually be one of the biggest advantages to have investors and raise money. If you are not 100% sure about your idea, whether it’s worth spending your life on it, getting someone experienced to tell you “This is only worth 2 years of your time” can be quite valuable given how high the opportunity cost gets with time.

In our case, on Bubble, we were quite convinced there had to be a solution to the problem we were tackling. Because we had that certainty in our mind, we didn’t feel that we needed validation from the ecosystem. And this turned out great for us, I don’t think we could have proven our model and that our product was production-ready had we taken another, more traditional route.

Originally published at medium.com on May 3, 2018.