At Farview we have a deep appreciation for founders that decide to bootstrap. Starting a business is hard. Embarking on the journey alone, with no outside capital, is harder still. Founders are required to develop a deep understanding of their customers and deliver value right away. The only way to finance growth is through the strongest possible validation mechanism: selling products that customers are willing to pay for. This crucible of customer demand shapes the DNA of bootstrapped businesses in unique ways, and the ones that emerge are often more disciplined, customer centric, and resilient than their VC funded peers.
However, at certain points in their development bootstrapped businesses face scaling challenges – points of growth friction that stem from adding new markets, products, and people. All these dimensions create complexity. Founders are forced to trade-off growth initiatives and rearchitect systems and processes to scale with the business. Raising Growth Equity – at the right time, from the right partner – can help cut through this complexity. Founders can de-risk and access the capital, connections and scaling experience required to cross the development ‘Gap’. Importantly, we believe this can happen without comprising the core principles that make bootstrapped businesses so special.
The case for bootstrapping
Venture Capital is a power law industry. A small number of companies generate the majority of VC returns, and modern funds are built to double-down on their winners. Breaking into that gilded group can make or break a startup – particularly if their business model is dependent on their position in the NVIDIA order book.
Yet VC money comes with its own set of challenges, and there is no correlation between capital raised and lasting success. In fact 75% of venture backed companies fail(1). The traditional VC model is effective and necessary for specific types of capital-intensive business models, but it is not designed for everyone, and bootstrapping can be a viable alternative to the fundraising treadmill.
The advent of cloud computing, and more recently AI, is making it cheaper than ever to start a company. Open-source frameworks, no-code platforms, and AI tools like Lovable, Cursor, Replit, and GitHub Copilot have slashed the cost of building applications. A solo founder can now create what once took a full engineering team. At Farview, we are increasingly seeing companies’ hit traditional ARR scaling milestones on a significantly lower cost base and headcount.
Moreover, we believe capital constraint breeds focus and often creates better business outcomes. Plato famously wrote “our need will be the real creator” (the origin of the proverb “necessity is the mother of invention”). This feels particularly apt for bootstrapped businesses. To thrive, these companies must generate revenue early – this means solving real customer problems and delivering products people will pay for. They cannot afford vanity growth metrics or high-salaried executives. Instead, they must prioritize customer value and profitability. In our experience, this lean mindset results in better unit economics, product focus, and a stronger foundation for growth.
Bootstrapping, by definition, also provides founders with complete ownership and control. In contrast, recent Carta data suggests that most VC backed founders own less than 50% of their companies after raising their Series A(2). Bootstrapped founders are not beholden to investors demanding aggressive exit timelines and are therefore free to build on their own terms, following their long-term vision for the company. This can result in exceptional economic outcomes for management and employees. Mailchimp was bootstrapped. The company hit $600M ARR in 2018 and in 2021 were acquired by Intuit for ~$12B in stock and cash. Atlassian, best known for Jira and Confluence, bootstrapped for 8 years to over $50M of ARR before raising money in a single growth round from Accel in 2010. They went public in 2015 at a $4.4B market cap.
All of this begs the question: Why would a founder building a capital efficient, profitable business choose to raise funding?
Identifying the bootstrapped ‘Gap’
Bootstrapping is not for the faint of heart. You eat what you kill, and in the early years every possible dollar is recycled back into the business. Once the company achieves product-market-fit and starts to take-off, scaling through growth stages presents its own unique set of challenges. Businesses inherently become more complex as they scale, and at a certain point in their development they encounter new pressures created by:
International expansion, leading to internal competition for resources. Going international requires a significant investment of time, energy, and resources. The resources component of that equation is significant – building a new team in a new market is not cheap, particularly if that market is the US. You have to forward invest to build a beachhead, with no guarantee that your product, go-to-market motion, or delivery model will translate to the new geography (not to mention the legal, tax and reporting headaches). For a bootstrapped founder that is capital constrained, that means diverting resources from other projects and making painful choices about which growth lever to prioritise.
Building the processes and systems required to scale. More products, more geographies, more customer segments, more go-to-market motions, more people. Every additional dimension creates complexity that compounds. To handle this complexity, companies need documented processes and systems that scale. Technology has lowered the bar, and there are a host of SaaS products and infrastructure tools designed to facilitate data sharing, communication, and automation across the organisation. However, selecting the right products and designing systems relevant to the company’s current stage of maturity, whilst future-proofing the business for growth, can be a daunting task without the ability to draw on experience.
Transitioning from generalists to specialists. Adding experienced hires with deep functional capability and growth stage affinity can be a powerful accelerator. Specialists level-up their function, leveraging their skill set to solve complex problems and implement best practice across their domain. Importantly, specialist skills need to be matched with cross-functional understanding and the ability to collaborate with other departments (i.e. a T-shaped rather than an I-shaped profile). High-performing specialists are rare, and consequently expensive. Furthermore, hiring specialists can often come at the cost of long-standing and valued contributors. This can be a difficult transition for bootstrapped founders to navigate. Generalists are vital to the startup journey, but may not be a fit for the next stage of growth. We have even seen this apply to founders who self-select into a functional department leadership role they are passionate about, or step-up to a board level position, to make room for an experienced CEO.
Creating a culture that can glue together a larger organisation. Building culture is a company-wide effort and needs to be embedded into the organisational DNA. This becomes harder as bootstrapped companies scale – Dunbar’s Law states that people can only maintain meaningful relationships with approximately 150 individuals at once. As the leadership team expands and hiring moves beyond the founder’s span of control, culture can quickly degrade without early alignment on the company’s purpose, ambition, and ways of working. This can be even harder if you need to transplant culture into a new geography. We often see the emergence of knowledge and communication siloes as companies enter new markets and the headcount approaches 150. Documented policies and a clear, consistent, multi-channel communications strategy are key tools to combat this.
The role of Growth Equity
Growth Equity firms like Farview invest in companies that can demonstrate a sustainable, repeatable business model underpinned by compelling unit economics. Crucially these businesses have validated their markets, honed their products, and often achieved profitability. When they’re ready to accelerate – whether to launch globally, hire top talent, or expand product offerings – Growth Equity provides the capital and partnership to make it happen. This can benefit bootstrapped companies in a number of ways:
Liquidity for long-standing contributors, including founders. Unlike Venture Capital, Growth Equity deals typically include an element of secondary capital, allowing founders to take cash off the table and realise value. This creates shareholder alignment for the next-stage of growth – bootstrapped founders no longer have 100% of their personal net wealth tied to the company. They can afford to place bets on growth and make executive decisions independent of their personal cost of capital and financial circumstances. A liquidity event also rewards early contributors and can be a powerful signalling tool to attract future talent.
Fresh capital to provide balance sheet firepower to take on bigger challenges. A core tenet of Growth Equity is early investment in the building blocks of growth, ahead of revenue acceleration. This could be money behind a new GTM motion, hiring the landing team in a new geographic market, or extending the product suite through R&D investment. In each scenario, primary capital provides the balance sheet strength to place strategic bets without compromising the core business. This de-risks decision making and empowers management to follow a long-term growth plan without the drag of short-term resource constraints.
Full lifecycle M&A support to drive inorganic growth. Bolt-on M&A can be powerful way to accelerate growth and add strategic value. When done correctly, it should serve the company’s strategic objectives by adding some combination of talent, technology, products and services, or new geographic markets. The goal is to make 1 + 1 = 3. However, executing a successful inorganic growth strategy requires a significant investment of time and resources – M&A is complex and can destroy as well as create value. Here the knowledge, experience, and financial resources of a Growth Equity firm can help. At Farview we spend months, or sometimes years, assessing the latent potential in the sectors that we know best, mapping the emerging players. Once we make an investment, we’re able to leverage this knowledge to help management teams identify buy-and-build opportunities and support them through the deal cycle. Unlocking value post-transaction is equally important, if not more so, and we work closely with the relevant executive leaders to ensure the post-deal integration process is robust and well-resourced. This includes bridging potential cultural fault lines between the two businesses and helping management prioritise decisions that will deliver the most value.
Governance that lets founders continue to play a lead role, without having to relinquish control. A condition of accepting outside capital is establishing a stage-appropriate governance structure. For bootstrapped businesses, this normally involves forming a board. The board exists to ensure accountability and transparency between the people running the company and the shareholders. However, it should not be a “tick the box” exercise – when properly constituted, effective boards provide guidance, validation and strategic support to the management team. Crucially for bootstrapped founders, establishing a board does not mean ceding control. In a minority investment structure founders retain majority ownership of the business and, while it is common for company articles to include minority protections and consent rights to protect investor interests, operational decision-making remains in management’s hands.
Access to deep bench of functional experts familiar with the problems on other side of the ‘Gap’. For many founders attempting to cross the gap, the company they are running is the largest they have ever worked in. As the company expands and becomes more complex, the number of “new” problems that emerge grows exponentially. Except these problems are rarely new. History is filled with companies that have successfully scaled through the growth stage to become mature, market leading businesses. Expanding internationally, implementing new systems, augmenting the team with specialists, and maintaining the company culture are all challenges that have been solved before. Drawing on knowledge from experienced operators that have already grappled with these problems is invaluable to avoid common pitfalls. At Farview, our portfolio companies have access to a deep bench of functional experts in our Strategic Advisory Team that are on-hand to help them navigate the growth journey.
Opportunity to generate highest returns on remaining (significant) ownership. Dilution or reduced upside are commonly cited as the cost of bringing in a new investor. However, access to more capital, connections and scaling experience provides bootstrapped companies with the opportunity to turbo charge growth. The company’s flywheel turns at a faster rate, and existing shareholders can compound their remaining equity value alongside the new Growth Equity firm. In many cases this presents the best opportunity to generate the highest return on remaining equity versus going it alone.
Growth is difficult to fit into a neat framework, and high-quality companies are constructed in many different ways. At Farview, we are firm believers in empowering durable growth, which aligns closely with the ethos of bootstrapped businesses. Patient teams dedicated to building strong business fundamentals might not demonstrate the near-term “hypergrowth” required by VCs, but they’re still just as likely to craft sustainable flywheel business models with real levers of expansion that allow them to compound with time. Growth Equity can provide valuable support on that journey, partnering with the founding team to build shareholder value. At Farview, our belief is the best businesses are not those that raise the most capital, they are the ones built to last. If you’re a bootstrapped founder looking to cross the gap, we’d love to hear from you.
(1) Wall Steet Journal, The Venture Capital Secret: 3 Out of 4 Start-Ups Fail
(2) Carta Founder Ownership Report 2025