External Funding vs Organic Growth

There’s been a lot of talk in the blogosphere this month on  the topic of organic growth or bootstrapping vs taking external money (ie, VCs, Angels, public listings, etc).

I think this is mainly fueled by Tony Hsieh talking on inc.com on “Why I sold Zappos”  and Sridhar Vembu’s post on why Zoho haven’t taken VC money.

A couple of the articles have referenced my company, KashFlow, directly.

– At KashFlow, we’re bootstrapped – spending only what we make.

– Our main competitor is a publicly-listed company that has raised a LOT of money from the markets and is spending it very quickly (to great effect I might add).

– Another established competitor is trying to raise €5m to fund growth

– A small startup recently announced a “financing deal” from “strategic investors”. No names or amounts.

I had quite a lengthy conversation with Ben Kepes at CloudAve which resulted in this post – I won’t repeat everything I’ve said there but I do encourage you to go read it if you’re interested in why we didn’t look for big money early on and haven’t since.

I would however add a P.S. to my comments to Ben:

I’m not against the idea of VC money entirely. It has it’s uses. But not for us, not right now.

A time may well come when it’s the sensible thing to do for a number of reasons or an attractive deal may present itself. That might be next month, next quarter or next year. But right now, we don’t need external money to execute our strategy so I’m not getting distracted by looking for it.

The only reason for taking money right now would be to get Mike Butcher at TechCrunch to give us some exposure and a massive spike of traffic.

Update: Mike picked me up on my closing comment above. He also flagged up an interesting post he made a couple of years back about how to get coverage on TechCrunch and other media outlets. Well worth reading in full.