Dave Elkington self-funded his billion-dollar sales technology company, InsideSales.com, for eight years — even cleaning medical offices overnight to make the company's payroll — until it finally received a round of venture capital in 2012.
What Elkington wouldn't do was accept loans or outside money. He wanted to make decisions independently, without "worrying about debt collectors or outside influences." He was also in a stronger position to negotiate favorable terms with investors when the right time came, because the company had proved its ability to control costs.
InsideSales.com, founded in 2004, has raised $264 million in venture capital since its first investment round in 2011 and is currently valued at $1.65 billion, according to PitchBook.
While building Pluralsight, an online learning company that has been valued at more than $1 billion, Aaron Skonnard and his co-founders also avoided outside financing in order to maintain control of the overall business direction. Skonnard says staying in the black on a shoestring budget ultimately helped to make Pluralsight, also founded in 2004, more attractive to venture capitalists that have invested more than $200 million in the company since 2013, according to PitchBook.
The decision to self-fund — bootstrap a business, as it's known — or take money from lenders isn't an easy one and depends on many factors. Before taking a loan or credit to start a business venture, entrepreneurs should review the following.