In 2009, my friend Paul and I decided to start a company. We’ve both worked as software developers and project leaders for large companies, and we understood the challenges and opportunities of building great, modular teams that can get things done and fit right in with the corporate culture. Our idea was nearshoring or empowering our friends and neighbors in Latin America (LATAM) to work for some of Silicon Valley’s leading companies without having to leave their homes in Argentina, Mexico, or Brazil.
It was difficult to find funds in LATAM, so we concluded that the only way to move forward was to bootstrap the company ourselves. Soon we faced a new onslaught of challenges, from client acquisition to incorporating new tech. Thankfully, we were successful; the company is now considered a unicorn and employs around 4,000 people.
It was at this point when the inevitable question was raised: What now?
My answer? Start a venture capital (VC) firm.
Why enter VC as successful bootstrappers?
You hardly have to be a top-notch analyst to question my judgment here. For one thing, VC firms aren’t doing too well right now. Sure, 2021 was a strong year for the industry, and 2022 wasn’t too terrible, but U.S. venture capital firms raised $67 billion in 2023, a whopping 30 percent decrease from 2022 and the lowest mark the industry hit in nearly a decade. And 2024 isn’t looking much better: Despite a rebound in the stock market and anticipated decreases in interest rates, the tech ecosystem is looking at its fair share of problems, including a diminished tech IPO window and liquidity challenges.
All this skepticism aside, however, a larger question remains: Why would anyone who had successfully bootstrapped a company want to get involved in venture capital? The two, after all, are apparent polar opposites. Bootstrapping involves relying on personal savings, revenue, or loans from close associates, allowing entrepreneurs to maintain complete ownership, freedom, and control of their businesses. And while these are all good things, bootstrapping also means a slower pace of growth, a much higher tolerance for risk, and the dreadful feeling that, no matter the challenge, you’ve got no one to count on and no margin for error.
Things are very different on the VC side of the fence. VCs give entrepreneurs the resources they need to thrive, which means that they can make bolder investments and accelerate their growth. And because accepting VC money means relinquishing some control to your investors, you don’t have to take on all the risk yourself. Your backers, most likely, also have an extensive business network that can help you make new deals and acquire new clients, which can save you a lot of time and trouble.
Bootstrapping permits flexible exit strategies, such as selling the business or maintaining long-term ownership. VC money often means big exit events, like IPOs or acquisitions. One is for risk-takers, the other for team players.
Recently I had the opportunity to discuss this very topic guest lecturing at Stanford University with the incoming wave of entrepreneurs. Here I was able to chat with students about how the startup journey and life really are dependent on personal values and motivations. The class and I concluded that these also have an impact on your happiness and doing what you love. So at the conception of the startup journey, when evaluating personal values and motivations to decide between bootstrapping or VC, it may seem that the two are completely at odds.
It’s a lot for an entrepreneur to think about. So, where to begin?
Pay it forward
When we were starting our company, Paul and I would often sit and reflect on what we understood to be our biggest challenge. We were pretty sure we had the skills to succeed, but we were just as sure we didn’t have the connections we needed. Two kids from Latin America, we didn’t have a Rolodex stacked with the names and numbers of executives at major tech firms. We had no networking opportunities and no one to mentor us and give us the precious advice that could’ve saved us so much time and money.
Back in those days, we swore that if we ever made it, we would give young entrepreneurs precisely the resources we wished we had. And then, having made it, we took this promise seriously. VCs and bootstrappers, we realized, weren’t diametrically opposed after all. In fact, they were merely two pieces of a puzzle that belonged together. You could—and should—have the bootstrapper’s resilience, passion, grit, and appetite. You could—and should—have the VC-backed founder’s access to great advice and great contacts.
If you want to leverage VC money, have a bootstrap mentality. But if you want to bootstrap, make sure to have great mentors who will help you along the way. It’s an advantage any entrepreneur can use, but it’s especially crucial for folks in the burgeoning Latin America tech ecosystem, who were once far removed from the older hubs of finance and technology.
This is why we started BDev Ventures. The tools that we provide in our mentorship program are not common in the VC world. Our idea is not only to fund but also uplift Latino-owned companies by assisting with challenges we also faced like recruiting, networking, and client acquisition made easier with marketing tools we built. In one example, we partnered with our portfolio company, eBombo, a Peru-based company, founded by Mateo Suarez Stewart that created a platform that enables hybrid or remote workers to connect through games, training, and other activities. Mateo and the team had the right bootstrapper spirit, and, with our help with lead gen in nine different countries, in 2023 we helped generate around 40% of all their revenue.
Here’s hoping, then, that as tech and venture capital alike continue to face challenges, they encourage funders and entrepreneurs to give back by entertaining new holistic approaches to doing business, and guiding startups to benefit from the entrepreneurial spirit required for both self-funding and VC backing.
Nacho De Marco is the cofounder and CEO of BairesDev.
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