Selling for a bootstrapped startup VS venture-backed startup:

There's pros and cons to each and preference depends on what you value.

If you like to be challenged, given more responsibility, and move fast while breaking things; a bootstrapped startup may feel like a nice home for you.

If you prefer to follow a proven playbook and have ample resources provided to you; a venture-backed startup may feel more comfortable. 

What's interesting is the 3rd option that's rarely discussed...

Which is working for a customer-funded startup. 

These are rare, but they come with a lot of upside:

1. They have growth capital without the wild revenue requirements of VC's
2. They have a great product because otherwise customers wouldn't invest
3. They have excellent alignment between employees and customers

I've been working with FyxerAI who's been narrowing in on this strategy. 

Raising funds from customers buys them time while enabling growth. 

It doesn't mean they won't eventually seek venture capital. 

But it means they'll have more leverage and remain in control for longer. 

After researching this concept, one thing became abundantly clear...

If your customers are willing to cut checks and become investors...

You've built an incredible product. 

Even if you don't need their investments, it might be wise to take them.

It makes for a super compelling story when it comes time to pitch VC's.

The voice of your customer investors will serve as a happy medium.

If you can work for a startup that is (or was) customer funded...

I'd strongly consider it.

There are more companies than you may realize who have raised customer funding but they often don't advertise this widely.

I suppose it may be viewed as unattractive by VC's which is why they may do this quietly but companies like Zapier, Mailchimp, and Buffer all seem to have some track record of raising customer funds or "crowdsourcing" in the past (and many more).

It's been difficult to find clear documentation of this but I've seen it mentioned enough through my research to conclude that at least some of these companies have actually done it. 

I think we'll be seeing more of this into the future, especially since remote startups require less capital in the early days and can grow remotely with customer funds (or crowdsourcing) and delay the VC rounds even longer (retaining more control). 

The barrier to entry in SaaS is continuing to reduce, however the competitive landscape continues to become more intense; both exciting realities.

Happy Selling,