Mean time to profitability for bootstrapped startups?
Are there any stats for the mean time to profitability for bootstrapped startups.
I guess only of the ones that are successful.
Since 90% of the fail we probably have to ignore these.
I think they key thing I'm looking for is how to plan for funding so that I can know I can raise enough to hit my goals.
I think the common rationale is to try to hit 18 months worth of funding. This way you can try to get in 2-3 experiments to get to profitability
#growth #ask-ih
How do you define profitability? In solo-founder bootstrapped companies, people often consider their work to be free, at least in the beginning. I think I'd rather look at a specific MRR target than "profitability".
As to MRR, this really depends on the type of business. As an example, with a B2B SaaS, I'd say you should expect to spend about 2 years until you get to a meaningful MRR.
Define 'meaningful MRR'?
Well, something you can use to realistically support yourself, I'd say. And by "realistically" I mean not forgetting that your computers are not free, your rent/mortgage isn't 0, your insurance isn't free, and if you have or plan to have a family, that isn't quite free either (an understatement of the century).
I don't want to provide a specific number, because whenever I do, people attack the number saying that they are able to live on ramen in Thailand living in a hostel with a shared bunk bed, working on a $100 chromebook for much less than that.
I'm confused, doesn't bootstrapped mean no outside funding?
If you want to build a startup, raise money, and all that, fine, but that's not really bootstrapping.
Yes but you don't HAVE to be bootstrapped... one of the things I like about this is to build something so I can get insanely good terms.
If you go into a VC with revenue and 30% month over month goals you can get good terms and use that cash to accelerate your growth even more.
Agreed. I've primarily worked for funded early stage startups.
I'm just confused about your question. If you're trying to plan out the amount of funding you should raise for a venture-backed startup, why are you asking how long it takes a bootstrapped startup to reach profitability? These are two very different kinds of businesses with different growth speeds and goals.
If you're asking how much money you should raise, I agree with your number of 18 months. That's pretty common in the startup space, unless you're doing something with a heavy R&D component (pharma, defence, etc.).
That said, I've never been at a startup that wished they had raised less money, so if you get a lot of interest from investors, you may want to raise 24 months.
Basically I'm trying to see if I can skip the seed stage and go right to A... or somewhere between seed and A.