Venture Capital funding might seem like a must for an early stage cloud-based consumer backup service, but a Silicon Valley startup called Backblaze decided against it. They chose to bootstrap their startup and are better for it.
Backblaze's founder Brian Wilson had experience taking early-stage funding from venture capital investors (VCs) with a previous startup, and while he achieved a successful exit with that company, the stress he encountered along the way motivated him to seek an alternative approach when starting Backblaze.
In the ebook by SecureDocs, Inc. Founder, Albert Oaten, "Bootstrap Your Startup: Backblaze's Rocky Road to Real Business Success with Zero Funding" Oaten outlines four points that entrepreneurs would be wise to consider when deciding weather or not to seek VC funding.
Four Tips on Venture Capital Funding
Seek paying customers first, investors second. The difference in the cost of capital in terms of equity you must give up could be 10X. Furthermore, that equity is the difference between you controlling your company or the venture capitalists controlling your company.
Be sure your goals align with VCs goals in terms of time horizon and exit amount. Building a company worth $100 million is radically different than building one worth $1 billion. Is your business opportunity geared for long-term slow growth or short-term fast growth? Do you like working in big companies or would you prefer keeping your company small and nimble?
Consider how important it is to retain control of your company. How will you take it when someone tells you that you are wrong and need to do it a different way? If you are VC funded early, when things go wrong, company ownership and voting rights come into play and Founder or not, you will do what you are told.
VCs serve a vital role. They allow Founders to put their ideas and work out to the world while drawing a regular salary and leading a decent life. Not everyone can or should mortgage their homes, future, or give up income to fund a dream. The likelihood of failure is high, and the consequences too difficult to absorb in personal and professional life.
“I worry people will read about us, and think the best path to take is to mortgage their house instead of taking money from VCs.”
-Brian Wilson, Backblaze Founder
Find out more about how Backblaze built a successful business without early-stage funding, download the free ebook by clicking below:
Backblaze is a leading cloud backup service that automatically backs up unlimited computer data for $5 per month per computer. Available for both Mac and Windows computers, for individual and businesses, the service enables customers to access files via a web browser, iPhone or Android app, or even a hard drive delivered via FedEx.
The company designed and operates it’s own cloud storage, currently stores over 150 petabytes of data, and has recovered over 10 billion files for customers in 175 countries. Backblaze has won awards including SIIA CODiE for Best Cloud Storage and Back Up Solution, AlwaysOn Global Top 250 private companies, and Deloitte Fast 500 as the #128 fastest growing technology company in the U.S