I’ve bootstrapped multiple businesses, raised well over $100 million in venture capital, and advised hundreds of entrepreneurs on the pros and cons of raising capital.
In 1995, I started my first e-commerce business and bootstrapped it the whole way, paying for medical school with the earnings from the business. As a college kid with no experience running a small lifestyle business, I had no choice but to bootstrap this business. Venture capital didn’t flow nearly as freely in 1995 as it does today.
In 2001, I started my second business and bootstrapped it as well. I founded this business with my brother, who has served as president of a publicly traded company. Given his pedigree and my past success in e-commerce, coupled with our more ambitious business model, we could’ve easily raised venture capital.
Despite being approached by several firms, we never raised outside capital. I regret that we didn’t. While we bootstrapped a very nice business with eight figures of annual revenue, we could’ve easily built a much larger enterprise with a well-timed infusion of capital.
After selling that business in 2008, I decided to pursue a much more aggressive model. We raised the first round of venture capital in Arkansas in over a decade, and eventually raised over $100 million of venture capital. A private equity firm purchased a majority stake. I owned well under 10 percent of the company.
Despite building a much larger enterprise, I generated more personal wealth through my first two business. It’s often better to own 100 percent of a smaller pie than a much smaller percentage of a larger entity.
In my current venture — Engine, an e-commerce software platform — we are pursuing a hybrid approach. While we’ve raised two smaller rounds of capital totaling $6 million, giving us stability and additional engineering resources, we operate the business more similarly to a bootstrapped business: we are seeking to turn a profit as soon as possible.