The Truth About Boostrapped Startups Might Surprise You

🍿 Quick Snack

• 🚀 Up until $300K ARR, bootstrapped companies in the top quartile grow the fastest

• 🎱 8 simple steps to create a profitable SaaS startup in 2024

• 📈 The 10 KPIs every SaaS founder should be trakcing

• 📊 How to triple the conversions on your landing page

🍔 The Full Meal

Which Model is Better? Bootstrapped or VC-backed?

In terms of growth milestones…

• Up until $300K ARR, bootstrapped companies in the top quartile grow the fastest.

• From there onwards, VC-backed companies in the top quartile have the advantage, reaching $1M ARR in 10 months, compared to Bootstrapped companies taking 16 months to reach the same milestone.

In terms of ARR growth…

• VC-backed companies below the $1M ARR range have experienced the biggest drop in Median ARR year-over-year growth

• At present, small and large bootstrapped businesses are growing at approximately the same rates (14% and 15% median ARR growth, respectively)

• Small VC backed companies are growing faster than larger VC-backed companies (36% and 26% median ARR growth, respectively)

In terms of new business growth…

• In the $1M-$30M ARR range, since late 2022, all SaaS companies have experienced similar new business growth rates at both median and top quartile levels.

• In the category of companies below $1M ARR, the median Bootstrapped company has suffered the most, hitting negative values in new business.

• Top-quartile bootstrapped companies have outperformed the median VC-backed business.

In terms of customer retention…

• In the $1M-$30M ARR range, top quartile bootstrapped companies started outperforming VC-backed companies since Q3 2023.

• Broadly, when looking at median performance, VC-backed companies fare much better

• Below $1M ARR, startups across both funding models appear to retain customers fairly equally. However, in 2024, the bootstrapped model has outperformed by a small margin (~3%)

In terms of net revenue retention…

• in the $1M-$30M ARR range, both funding models perform quite similarly, with VC-backed companies coming ahead by about 2-3%

• Below $1M ARR, both funding models perform quite similarly.

  

The Blueprint for Creating A Profitable SaaS Startup

1. Build niche internet audience (faceless, personal brand)

2. Create lead magnets (templates, community)

3. Unbundle existing SaaS app (1 killer feature)

4. Charge lifetime deal or pay-per-usage (not subscriptions)

5. Build an army of affiliates

6. Share revenue with creators (25%-50% cut)

7. Don't raise VC, sell for 5x+ ARR in 2-5 years

8. Retire or repeat

Credits to @gregisenberg for this list.

🍟 Extra Fries

• 10 KPIs all SaaS businesses should track (link)

• How to 3x conversions for your landing page (link)

• Why you should include pricing on your website (link)

Looking to start your own newsletter? get started on Beehiiv.