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Can a tech company be started without venture capital?
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5 Answers
Sure. You can bootstrap any business. Depends on what your goals in terms of growth are.
It depends on the type of business, the people involved and what market segment you're going after... If you're looking to make a product for the enterprise, unless you have a healthy bank account personally or one of your co-founders is a developer - it's going to be extremely difficult.
Service companies definitely can be; product companies are typically a different ballgame. That's why you see so many tech startups that have developers / programmers as co-founder. It's essentially free development for the people who manage the corporate aspects of the business such as sales, etc... Twitter, Quora, Digg, Facebook, Mint et al are just a few examples of start-ups with a developer as a co-founder.
That's not to say you can't start a tech product company without venture capital or a developer; just that in most cases it requires pretty substantial investment from the founder's personal finances.
You absolutely can.
VC money may help you purchase people and infrastructure, but its the core/original group of people who actually create the vision of the product. Without the drive and dream at the inception, no amount of VC money will make your business work.
Dreams and Ideas make new compelling products; not money.
In Silicon Valley, there are thousands of tech companies founded each year and only a small fraction of them ever receive venture or angel financing. As a result, many do not survive or their growth may be stunted from lack of financing.
Despite the above comments, some firms are able to get to revenue on relatively little money and without institutional financing. In my experience, they typically are firms that are in software or Internet services, require little capital investment and do not require a lot of employees (with most working without pay). The barriers to entry now in these areas are very small, there are open source products that can save time and very creative people can get a lot done in software with little outside help.
If you are a tech company in some other area, such as semiconductor, life sciences, clean tech and the like, venture financing is more important. If you wish to start a firm in this area, it makes sense to seek funding early and reevaluate your plans if investors are not willing to join you.
In Silicon Valley, there are many organizations that exist to support startup companies including incubators, meeting groups, professional associations and the like. If you are lucky enough to be here, you should take advantage of free and low cost services such as these if you qualify. Some organizations will take stock as compensation for services they provide. Bootstrapping is so common here that there are even support groups for companies in this mode. So reach out. If your company is in some other place, see what is available locally to support entrepreneurship, there may be more than you think.
Can you start a tech company WITH venture capital?
There is a tech company in Indianapolis that is owned 80% by the founder. He got investors, but he had had a former company ripped away from him in his early days. He vowed to not let that happen again. So the terms are important. (Watch "The Social Network" about Facebook to see what happened to one of the founders when VCs got involved.)
The term tech is an interesting term. Creating a sub-molecular substance that repels attacks cancer cells and leaves healthy ones alone is a tech company. FDA might never approve it, but it needs millions of dollars of research, production capacity, and red tape management.
An Android app that makes a sneezing sound when spam goes into your inbox might also be called a "tech" company and it might make you a million dollars, but I don't know that you need a VC to fund it.
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