JOC.com — The persistent debate in the world of technology startups about the merits of fundraising versus bootstrapping, or self-financing, may seem to shippers like a technical discussion with little relevance to their business. But how startups fuel their expansion can have real-world implications on the level of service shippers receive — and for how long.
The critical questions for early-stage software providers targeting the beneficial cargo owner community are these: what is the best path to reach shippers in a financing environment flush with cash? And can a startup get traction among customers quickly enough to drive revenue, or does it need outside investment to help it develop scale?
There are pros and cons to both approaches. Companies that fundraise with venture capital groups get space to develop products that the market needs without worrying about day-to-day viability. That’s offset by the time it takes founders to raise money, and by the potential to get in a cycle of fundraising rather than honing the business for the benefit of shippers.
Companies that bootstrap can spend their time building a business that must be necessarily profitable, however, they risk missing opportunities to solve higher-level industry problems that they might be able to tackle if free from the constraints of needing to be profitable.