The Truth About Startups and Runway: I saw a statistic that less than .05% of startups raise venture capital and 77% of small businesses use personal savings for their initial funds.
Don’t get me started on getting loans from traditional lending intuitions, good luck with that on a startup under 2 years old.
Most startups are messy businesses.
Sure you have the companies that are well funded with private equity and VC capital. But for most companies, it looks like personal funds, business credit cards, personal credit cards, and anything else you find to fund the business.
The runway isn’t a runway it is more like an aisle on an airplane. That is to say, an airplane being built, in flight, low on fuel, and trying to refuel in flight. All at the same time!
Runway… Your options are fuel midair, with one engine down and a broken windshield, or crash into the mountain.
Personally, I have never raised a significant amount of VC money. Part of me wishes I had in previous endeavors.
However, there is a certain level of grit and determination that is created when you build a company without that safety net. There is a lot to be said about building something out of nothing, with little to no capital and seeing it grow.
Don’t get me wrong, I am not saying VC money and large capital raises are bad. I think to some extent capitalization is a big problem for startups.
Particularly, when it comes to recruiting and building the team. It is difficult to build a business culture and allow the team to dive deep into their areas of expertise when every few minutes you are fighting fires in the cockpit and looking for your next waypoint to refuel.
It is also tremendously difficult to recruit talented people for most bootstrapped startups, particularly in high costs states such as California.
However, there is something that is priceless in that struggle that I think most founders can benefit from. The grit, resourcefulness, and determination that are forged in bootstrapped companies is priceless.
For me personally, regardless if I am looking at the next project or hiring a team, I want to know about the struggles and the failures.
I want to hear about how you barely landed the plane, with no fuel, no engines, and no runway.
Even if you didn’t get it off the ground again.
That’s who I want to fly with!