Many Experienced SaaS Founders are Staying Away from VC Funding

Have you heard that second-time startup founders have an easier time raising funding from VC investors because of their experience? It used to be this way.

But I’m seeing more successful second-time founders starting their SaaS companies WITHOUT VC funding—because of their experience.

Savvy SaaS founders who have been through it know a few things that naive first-time founders don’t:

  •  It’s a LOT cheaper to create a sellable software product now than just five years ago. Most founders think about $300K of investment can get you there.
  • When you can sell and get to market efficiently, you can be profitable sooner to own your sanity and control your destiny.
  • Taking serious VC funding creates a much riskier bet in which founders can lose control of their biggest decisions.
  • Founders can be wildly successful in markets too small for VCs to invest in.
  • There is a huge wave of practical founders creating valuable software companies without big funding. It’s just a better way for most SaaS founders.

Oliver Low is CEO of Tiny Studios, part of the Tiny family of practical and profitable software businesses.

Oliver bootstrapped a software company and then sold it in 2018.

He didn’t buy into raising big VC funding in that first venture. And the crazy VC-funded unicorn-or-die model doesn’t fit him now.

Oliver runs the internal venture-creation studio at Tiny, one of the oldest and most successful “buy and hold” acquirers of bootstrapped and profitable software companies.

Like giant Berkshire Hathaway, run by Warren Buffett and Charlie Munger, Andrew Wilkinson and the team at Tiny acquire profitable software companies and let them run independently and profitably without ever intending to sell them.

Longevity plus profits equals a compounding flywheel of cash and value generation that keeps multiplying.

The Tiny team sees THOUSANDS of practical and profitable software businesses every year.

Oliver estimates there are over 10,000 profitable software businesses like this in the world, just as I am seeing.

Oliver uses Tiny’s deep learning and disciplined business approach to efficiently incubate new software companies that can grow quickly with minimum investment.

If you have the savvy to create valuable software businesses without big outside funding, why wouldn’t you try many ideas and spin a few up yourself?

The game has changed to create and grow practical software companies without massive funding or unrealistic expectations.

Generative AI will make this even cheaper and faster for savvy practical founders to do this cheaper and faster.

I enjoyed this wide-ranging interview with Oliver Low. I think you will, too.

Check out this Practical Founders Podcast episode.


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