# Decision Framework: Bootstrap vs Raise Venture Capital

## Key Considerations

### Arguments for Bootstrapping

1. **Full control** - No board, no investor pressure
2. **Keep equity** - 100% ownership (minus employee pool)
3. **Profitability focus** - Forces sustainable unit economics early
4. **Flexibility** - Can pivot, sell, or run indefinitely
5. **Lower stress** - No artificial growth pressure
6. **Keeps options open** - Can raise later if needed

### Arguments for Raising VC

1. **Speed to market** - Capital enables faster growth
2. **Winner-take-all markets** - Some markets require being first/biggest
3. **Capital-intensive models** - Hardware, deep tech, marketplaces
4. **Network and expertise** - Good VCs add value beyond money
5. **Hiring signal** - Funding helps attract talent
6. **Risk sharing** - Investors absorb some downside

## Decision Matrix

| Business Type | Likely Better Path |
|---------------|-------------------|
| SaaS with quick revenue | Bootstrap possible |
| Marketplace | Usually needs VC (chicken-egg) |
| Hardware | Usually needs VC (capital intensive) |
| Deep tech/biotech | Needs VC (long runway) |
| Services/consulting | Bootstrap |
| Consumer social | Usually needs VC (scale before monetize) |
| B2B software | Could go either way |
| AI/ML products | Often needs VC (talent costs) |

## Questions to Determine Path

1. **Time to revenue** - Can you get to revenue in <6 months with savings?
2. **Capital intensity** - Does growth require spending before earning?
3. **Market dynamics** - Is this winner-take-all or room for many players?
4. **Growth ambition** - Is $10M/year outcome acceptable or need $100M+?
5. **Control preference** - How much does full ownership matter to you?

## Hybrid Approaches

- **Bootstrap to traction, then raise** - Prove concept, get better terms
- **Revenue-based financing** - Debt tied to revenue, less dilution
- **Angel round only** - Smaller raise, less pressure than VC
- **Grants** - Non-dilutive funding (govt, research)

## Key Resources to Load

1. `KZ-should-your-startup-bootstrap-or-raise-venture-capital.md` - Direct comparison
2. `4A-a-guide-to-seed-fundraising.md` - If you decide to raise
3. `CH-venture-debt-101-basics-and-approach.md` - Alternative funding
4. `95-default-alive-or-default-dead.md` - Financial sustainability
5. `Il-how-startup-fundraising-works.md` - Fundraising mechanics

## Questions to Ask the User

- What's your current runway (savings, income)?
- How long until you can charge customers?
- Is your market winner-take-all or fragmented?
- What outcome would make you happy?
- How do you feel about giving up control?
