Has Dharmesh Shah lost his mind? (Part1)
The co-founder of HubSpot has written this great article over at OnStartups about why he chose to raise $17 million in Venture Funding despite a longtime commitment to bootstrapping.
With partner Brian Halligan, Dharmesh:
• Bootstrapped a startup. HubSpot was started with $500,000 of his own money, proceeds from sale of a previously bootstrapped business launched with just $10,000
• Delivered his product to customers. They got their initial product into the hands of customers (in what Dharmesh describes as the "pre-alpha and crappy" version)
• Raised some money from angels. About $1 million in additional capital on a product with an existing business model and customer base.
• Said no to a first round of VC funding. With the $1 million in angel funding they didn't need it, so they didn't take it. (How novel.)
• Finally said yes when the conditions were right. Knowing they were on to something big, they took $5 million in VC funding the first round but tried not to spend it too quickly using the money to hire the best people while increasing sales.
• And yes again when getting the funding was an easy matter. "As it turns out, one of the best times to raise venture funding is when you don't need the cash…" Dharmesh says.
So, was a confirmed bootstrapper right to take $17 million in VC funding when conditions were ripe? More in tomorrow's post "Has Dharmesh Shah lost his mind? (Part2)"…
Photo Credit: Clara Natoli, MorgueFile