When it comes to funding opportunities for your SaaS startup, you have a few different options to consider. If you’ve found yourselfwondering, “Should I continue to bootstrap my SaaS company or raise funding?”, you’ve come to the right place.

Some startup founders argue that bootstrapping is a great way to keep your company out of external debt. Others argue that software as a service (SaaS) financing companies do more than just give money; they can help you expand your network, provide marketing support, offer valuable industry knowledge, and tap into their own network to give you access to more investors. There are arguments in favour of both funding options, but the final decision is yours to make.

QualityHive is a feedback tool with revolutionary features supporting the operations of bootstrapped and funded SaaS products and companies. Understanding SaaS development and web development is integral to what we do. In this blog, we’ve shared an overview of bootstrapped vs funded SaaS products.

What Is Bootstrapping?

Bootstrapping is starting your company without raising external funds. You build a bootstrapped SaaS start-up with money from your pocket and revenue from early sales. Bootstrapping allows you to grow your start-up organically, and you’ll have complete control over your company without any outside interference.

Bootstrapped software companies often develop better financial discipline as they control and maintain their cash flows without any support from external investors.

Bootstrapped SaaS Products

Bootstrapped SaaS companies often seek the most cost-effective approaches for building software products. Because they’re not externally funded, they need to rely on innovative solutions and efficient ways to minimise overhead costs by adopting a lean business model. Lean operations help bootstrapped companies to maximise their value while minimising waste. Often, bootstrapped companies rely on open-source software development tools to keep their costs low while delivering a high-quality product.

Founders of bootstrapped software companies focus on what their customers want, without worrying about answering to investors. This means that they can efficiently develop and market their products. It also gives the development team more creative freedom even in the face of failure.

A good example of a bootstrapped SaaS company is GitHub, which successfully thrived as a bootstrapped start-up with minimal external funding before being acquired. The startup team allocated resources strategically and focussed more on product development and community engagement over aggressive marketing tactics.

What is Funding?

Funding or fundraising is receiving financial investment from a third party. Start-ups that seek out investors and get them to invest capital in exchange for equity.

Funding can help your business grow and evolve when you can’t manage it with your personal finances. SaaS financing companies inject capital into your startup to help you expand your product development, invest in sales and marketing, and hire additional staff. Venture capitalists, angel investors, crowdfunding, and debt financing are the most common sources of funding for software development.

Funded SaaS Products

Raising capital for funding your software development company has obvious perks. Investors can add value to your SaaS products by sharing insights and expertise in different business areas, from research and development to marketing and advertising.

Getting funding for your SaaS products on time can help you get your product onto the market faster. With extra capital as your financial backbone, you have more leeway to make mistakes and adapt to changing market conditions.

A forward-thinking development team can help you to design game-changing products and operate successfully. Fundraising makes it possible to attract new talent, enabling you to develop new, innovative SaaS products without worrying about your hiring budget.

It’s important to understand that SaaS financing companies will want a slice of your equity pie in exchange for capital. So if you’re keen on seeking funding, get ready for equity dilution. The money you receive to fuel your startup comes with strings attached. You may need to meet investors' conditions before they release their funds. You may lose the complete autonomy of your startup’s management if your financing companies are aiming to maximise shareholders’ potential returns.

Bootstrapped vs Funded SaaS Products, Which is Better?

In the Bootstrapped vs funded SaaS products comparison, which of the two is better?

High upfront development costs and recurring revenue models are the nature of SaaS businesses, which makes picking the correct funding strategy all the more important.

However, not all funding options are created equal, and both of the options we’ve mentioned here come with their own unique pros and cons. Your choice between the two will ultimately depend on your startup’s growth strategy and financial goals, your need for funding and equity, and more. Some may be more inclined towards bootstrapped SaaS products while others may think capital funding is better.

Ultimately, it’s your decision how you want your business and products to grow.

QualityHive - The Perfect Companion for Bootstrapped and Funded SaaS Products

QualityHive understands the needs of the development teams behind bootstrapped and funded SaaS products. Our feedback management tool helps your SaaS development team get off on the right track by simplifying feedback management.

Using our tool’s revolutionary features during your development phase, you can avoid the hassle of going back-and-forth on Excel sheets, reducing your likelihood of missing out on client comments and overlooking errors. Start looking forward to immediate feedback with screenshots and videos to make feedback easier to comprehend.

QualityHive can optimally support the QA testing of your funded or bootstrapped SaaS product before it goes live.

Book a free trial to learn more and experience our tool's features.