If you’re just starting your startup, you don’t need a ton of money to do it.
That’s the advice Y Combinator president Sam Altman gave today in a mini-tweetstorm.
Today, founders don’t get excited if they can “only” raise a million-dollar seed round of funding, but Altman says that you should be proud to make your company work on as little capital as possible.
After all, he says, Google’s seed round would have been a rather unimpressive sum today.
(Altman says Google’s $US100,000 angel round the company raised back in 1998 would be worth about $US750,000 in 2015 dollars. We did the maths with a calculator from the Bureau of Labour Statistics and determined that number would be closer to about $US146,000 today. Either way, the point stands: you can build a successful company cheaply.)
Altman goes on to say that Y Combinator’s best companies are able to make something impressive out of little funding. But, he says, many startups have become focused on raising as much money as they can, and being frugal has “become a lost art.”
As an additional reminder for startups, bootstrapping is cool, as is generating your own revenue! It leaves you in control, and your investors will never be able to fire you.
For an inspiring example of a cool bootstrapper, look at what the PlentyOfFish founder was able to achieve: he funded his dating website himself and was able to keep every penny when he sold it for $US575 million in cash to IAC.
Also, if you bootstrap a company to a $US20 million exit (like TechCrunch mostly did), it can be the same success for you financially as it is for a venture backed $US200-300 million exit (take, for example, Huffington Post or Bleacher Report).
So quit griping and build a lean company! As Altman points out, many of today’s best companies were built with $US1 million seed rounds or less.