Why Startup Studio vs. VC vs. Bootstrap

Entrepreneurship, do you play!

Whether you crave on becoming this modern-time hero called “entrepreneur”, looking for a shortcut to life changing jackpot event $$$ or lucid enough to be fulfilled by the beauty of the journey, you have to head somewhere when creating your own business. Especially if you want your creation to last.

When it comes to business, the marker of this so-sought-after “success” is most of the time the profit you will generate out of your endeavour, on the way and ultimately. Then, far beyond, one would consider social impact or self-development as an ultimate goal.

And like the best poker players, gut feeling always comes into play but statistics are essential to maximise your chances of success.

Bootstrapping a.k.a Casa de Papel

Let’s start with the “North Face” approach of company building, the so called “Bootstrapping”.

This is the most ancient way of creating and growing a business, that has survived the appearance of capitalism. Bootstrapping is for many entrepreneurs the purest way to develop your business, with maximum autonomy.

It requires founders to finance their company growth with their own profit. As a result, founders have to carry both operational and financial risks which tends to put their lifestyle under (high) pressure and to generate situations where cash tension hinder business growth.

As growth is slower, reaching a high company valuation becomes a long shot, especially for capital intensive business such as product-led companies.

On the other hand, founders keep control over their venture destiny at all-times and, when they survive, eventually cashout the leonine share of the company value.

  1. Time to exit: 🔴🔴🔴
  2. Probability of success 🔴
  3. Proceed size: 🟢🟢🟢
  4. Return on investment: 🟠🟠

Studio-backed venture: Ocean’s eleven

A startup studio provides entrepreneurs with all it takes to succeed, except the grit and skillset. That includes original business idea, building know-how, upfront capital, talent community, market accesses and team spirit.

In addition to all those unfair advantages, Studio-backed founders earn a discounted salary from the start and receive substantial shares of a company.

In other words, this model provides entrepreneurs with short-term down side protection (salary) and long-term performance-based upside (shares).

Founders benefit from experienced entrepreneurs to avoid pitfalls and the Studio provides the startup with sufficient capital to reach product-market fit.

And that works well: data shows that Studio-backed venture are 3 times more successful than other ventures and that time-to-seed-round and time-to-serie-A are shorter.

  1. Time to exit: 🟢
  2. Probability of success 🟢🟢🟢
  3. Proceed size: 🟠🟠
  4. Return on investment: 🟢🟢🟢

Investor-backed venture: The Godfather

Being backed by investors has now become the preferred path for new startup scene. It is appealing for founders to bring onboard capital in order to mitigate their own financial riskand to press the fast-forward button on startup timeline. It is also a risky path as the company may not be cash-efficient and become addicted to fundrainsing.

We all know great stories about Investor-backed startup but here is to know that VC statistical model is built on phenomenal returns for a small fraction of the portfolio and losses on the majority. And looking closer at the numbers down the road, you soon realise that founders often capture a small portion of their success.)

Hence the famous mantra - go big or go home… naked.

Too often this model results in a high pressure on company assets and interest disalignment between founders and investors. As in the casino, you can win as long as the Bank wins.

  1. Time to exit: 🟠🟠
  2. Probability of success 🟠🟠
  3. Proceed size: 🟠🟠
  4. Return on investment: 🟠🟠


Praveenghanta (2022) Bootstrapping vs VC – a Founder’s Comparison, Link

Sramana Mitra (2019) Best of Bootstrapping: Bootstrapping to an Exit, Link

Stephen Armstrong (2022) Why It’s the Age of the Investor-Entrepreneur, Link

Nighty Nine (2022) Étude sur la probabilité pourlever une series A, Link

Nick Zasowski (2020) Disrupting theVenture Landscape, Link


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