While most startups are bootstrapped, some entrepreneurs self-fund their startups by choice. I think it’s important that founders make data driven decisions about their startup funding options.
By hand collecting data about 465 acquired startups obtained from Crunchbase, I found some interesting insights about the performance of bootstrapped (self-funded) startups as compared to funded ones in terms of exit amount and period, founder background, gender and team. I analyzed the data to answer the following questions:
- Do funded startups exit sooner?
- Do funded startups have higher exits?
- How does the performance of bootstrapped teams compare with solo founders?
- Who’s more successful at bootstrapping, males or females?
- Does founders’ background matter?
While bootstrapped startups exit sooner, the average acquisition value for funded startups is higher.
While the acquisition value for bootstrapped solo founders is lower than bootstrapped teams, acquisitions for funded teams are on average significantly better than funded solo founders.
Bootstrapped female entrepreneurs outperform male founders.
Bootstrapped technical founders outperform their non-technical peers.
- A bootstrapped startup is defined as a company that 1) did not receive a single round of funding from start to exit, and/or 2) their funding amount is below the sample median.
- I only analyzed acquired startups. The results may thus be prone to a selection bias.
- Each startup is assigned to and analyzed with respect to its category (e-commerce, FinTech, EdTech, etc.). There is a total of 11 categories.
- The period of the study is from July 2007 until July 2017.
Although the data may not be representative of the whole industry, it provides some insights worth looking at and considering.