Venture Capital Isn't the Only Way to Build a Startup
Bootstrapping and venture capital funding are two totally different paths up the same mountain. If you bootstrap, you’ll be building your startup with your own resources: personal savings, revenue from early customers, and perhaps small loans from friends and family. With venture capital (VC) funding, you sell equity to professional investors in exchange for capital you can deploy immediately, often before you’re even profitable.
While the definitions of both are pretty clear, there are some gray areas that make them difficult to measure. Plenty of startups bootstrap for a couple years before seeking funding, while others use VC funding and/or a pre-seed round to get off the ground in the first place. The line that separates the two is nebulous, and as a result, the most commonly “cited” statistics are shoddy at best.
Some outlets say that 3% of startups raise venture capital, while you’ll also see the claim that only 0.05% do. There’s also a widely-circulated stat that pegs bootstrapped startups at a 35-40% five-year survival rate, against a 10-15% rate for venture-backed companies. These numbers have no clear origin, nor is there any necessary context given.
One thing we do know comes from a seven-year Carta study that tracked 4,369 US startups founded in 2018 and revisited their statuses in 2025. About 56% raised a seed round, and roughly 36% made it to Series A. The extent to which bootstrapping helped these startups eventually reach these funding rounds, however, is still unaccounted for.
Since statistics don’t provide a clear answer, you’ll have to base your decision on your own situation. If you begin scaling your company with a horde of wealth at your side, bootstrapping may be an easy pick. If you’ve got nothing but a great idea and the clothes on your back, you’ll probably need to claw your way to a pre-seed. Lots of entrepreneurs, however, start their projects somewhere in between. If that’s you, which direction should you head?
The Case for Bootstrapping
The main advantage is control. Outside investors can have an immense influence on a company’s direction, pace, and culture once they’re brought into the fold.. Without them, you can ship a feature because customers want it, not because your board members think your customers want it.
As you bootstrap, you’ll also be forced into determining product-market fit earlier on. That means you’ll find out pretty quickly whether people will actually pay for what you built. Plenty of well-funded startups have spent years and several million dollars avoiding that question, only to learn the answer too late.
If and when you do decide to seek funding down the road, whether at Series A or later, the fact that you bootstrapped your way there is often a great sign for investors. If you got to this point by yourself, after all, imagine where you could go with 8 figures of extra capital. Some venture capital veterans believe you should go even further than Series A; in entrepreneur Guy Kawasaki’s words,“The right algorithm is to put off seeking funds for as long as physically possible.”
All that said, there are certainly a few tradeoffs. Since you don’t start with a lump sum from investors, growth tends to be slower. The risk of failure largely sits on you personally, since you don’t have a fund or a board to absorb the losses alongside the wins. Another underrated obstacle is the problem of hiring; it’s tough to compete against companies offering higher salaries and more benefits to prospective employees. That said, leanness is considered a good thing at lots of modern startups, so slow hiring could be a blessing in disguise.
Lastly, bootstrapping is just plain hard. When you’re trying to manage it all yourself or with a tiny team, you’ll end up wearing a lot of hats and spending time on tasks you wish you could handwave away. With a financial platform like Slash, you can take those hats off and focus more on growth.¹
Slash can automate routine tasks like invoicing, bill pay, expense categorization & tracking, and the parts of month-end reconciliation that keep busy entrepreneurs up at night on the 29th. While some banking platforms are inaccessible to new founders, Slash allows users to apply without a Social Security number or a minimum balance in their bank account. You can even open up a Slash Visa® Platinum Card with no personal guarantee or credit check.
Bootstrapping is a strong choice if you have a business idea that can start earning revenue early, a solid pile of savings to draw from, and a banking platform like Slash to help along the way.
The Case for Venture Capital
Venture capital funding makes more sense when you have a strong concept, but you won’t make enough early revenue in time to support its growth. At that point, a pre-seed round can get you where you need to be. There is, however, another element to consider: speed.
If your startup is in a competitive category (such as AI or healthtech) where the first company to an idea becomes the king of the hill, moving slowly can be a losing battle even if your early metrics are promising. Someone with deeper pockets could outspend you on distribution and own the market before a “slow and steady” strategy pays off.
In contrast to bootstrapping, VC funding can make hiring easier, since the extra influx of funds can put you in position to attract better talent. Some high-profile investors may also bring name recognition in certain circles – kind of like Shark Tank, but a lot less dramatized.
The problem is the independence and equity you give up. As you pass from pre-seed to Series A, your shares usually get diluted bit by bit. The board you end up leading could either be helpful and supportive, or unrealistically demanding. Either way, you’ll have outside pressure to keep expanding that isn’t necessarily present when you’re funding by yourself and traveling at your own pace.
Let’s also take a moment to look back at that Carta study. Of those 4,300+ startups, 62% had closed by year six despite more than half having raised a seed round. We may not be able to compare success rates between bootstrappers and VC funders, but we can clearly tell that raising a seed round isn’t an automatic shortcut to success.
If you’re fortunate enough to be able to accept the funding from a seed round without having to fully rely on it to survive, you’ll also be able to use it a little more tactically. For example, Slash offers a treasury account that earns up to 3.85% annualized yield through government-backed money market funds.⁶ $500k from a seed round isn’t doing much in a standard business checking account, but it can earn meaningful value with Slash Treasury. You don’t even have to sacrifice flexibility – withdrawals typically settle in one business day.
How to Decide
Ultimately, one of the main deciding factors will be the funds (or lack thereof) you’re currently ready to spend. If you have enough savings to get off the ground, but you’re not sure how far they’ll take you, ask yourself the following questions:
- Does my market reward patience or speed? If there isn’t a particular sense of urgency surrounding your startup’s idea or field, you may be able to bootstrap. If it’s squaring up to be a race, VC funding can be a necessary boost.
- How quickly can I generate revenue? The more quickly your product can generate cash from sales/subscriptions, the more viable bootstrapping can be.
- What outcome am I looking for? Bootstrapping is high-risk, high-reward: you can fail quickly, but if you succeed, you get to reap most of the rewards and profits. Some founders may forget about the fact that they have to split successes with their investors when they rely on VC funding.
Finally, remember that the choice isn't permanent or binary. You can try bootstrapping for a period, find that you’re a little short on cash, then turn to a seed round. We separated them cleanly here, but every startup’s journey is a little different.
Regardless of the direction you head, Slash is there to support you along the way. Not only can our tools and accounts help businesses at all stages, but we also offer benefits meant to help bootstrappers and startups with VC backing. If you join Slash after passing through one of the accelerator programs that partner with us (Y Combinator, Khosla Ventures, and 18+ more) your startup may be eligible for a bonus of up to $5,000 in value, plus major discounts on the tools you'll need to scale through Slash Perks.
We built our platform for your startup’s entire journey, from your first idea to your 9-figure Series D and beyond. To learn more, reach out today.
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