Why Take Venture Cash When Your Company’s Making Money?

Strangers' millions come with strings attached.

Anthony Volodkin, Hype Machine’s founder, and a PBR that’s not beholden to VC dollars.

Bootstrapping—that risky period while someone is developing a product on savings but still probably looking at investors, down the road. That is, if what the founder’s building looks like it will work. But here’s the funny thing about a really great idea: if it makes money quickly, that’s a good argument not to go for venture backing. At least for some founders.
The challenge of venture money is that the investors will push a company to go after scale over building what could simply be, with a less aggressiveness, simply a reliable profit generator. The “scale fast” strategy either succeeds big or sinks a venture. That’s why some founders who can cover their own payroll like to keep the equity in house, even if that means taking a pass on becoming the next Uber.

Here’s a few that have, so far, walked slowly to success rather than running hard for scale:

This company has bootstrapped its way to a minimum viable product for scheduling coffee, but that doesn’t mean it won’t pursue backing later.

  • Ombligo: The Sunset Park, Brooklyn, based company picks up unused electronic equipment, refurbishes it and sells it on to other companies and organizations that need tech at a discount.
  • AudioSalad: A music-industry firm that made digital distribution and rights management easier for everyone involved, from fans, to labels to the bands themselves.
  • Sematext: Sematext builds utilities on the backend that are good at letting you know when something is weird in your sites performance, searches on the site or on your servers. It’s founder was well enough networked in tech that it had business as soon as it launched and it has been steadily growing since.
  • ControlShiftLabs: A Dumbo company that provides white-labelled web tools to social change organizations building grassroots leadership.
  • Hype Machine: Williambsburg’s music discovery O.G. keeps experimenting with new ways to let you know which new songs are perking up the blogosphere. Its iPhone app quickly became one of the top paid music apps when it was released in 2011.
  • Piccolo: This is a small, side project for its founders, launched out of Greenpoint. In short, it prints out your best photos posted to social media and mails them to you, for a subscription fee.
  • Thought Catalog: A media venture viewpoints in every possible length, under the philosophy that all thinking is relevant.

As good as life without monied masters is, the list is long of companies that kept it going for a long time without becoming beholden, only to shift gears later, including Imgur, Atlas Obscura (we covered their new Editor-In-Chief in October) and Cloth, a fashion selfie social network which went two years bootstrapping. It had its first small angel round last year, taking it off this list. Why Take Venture Cash When Your Company’s Making Money?