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Within the technology startup world, the conventional wisdom says there’s two types of companies. You’re either a (high-growth) ‘venture’ or a ‘lifestyle’ company.

To quickly level-set, the high-growth venture raises venture capital and seeks to generate a 5-10X return (or more) on investor capital through the eventual sale of the company. Venture capital firms invest in a portfolio of companies and require a few to wildly succeed, providing the desired rate of return for their investors. As a result, their portfolio companies are expected to grow aggressively (even if means flaming out in a blaze of glory).

A lifestyle company, on the other extreme, is calibrated to only to provide a desired level of income to its owners. By definition, a lifestyle company, doesn’t seek growth (and any associated risk) beyond the owner’s income needs.

I’ve had conversations with all sorts of folks involved in the startup community. There seems to be a default reaction when you mention self funding or bootstrapping a start-up. Immediately the ‘lifestyle’ term is used interchangeably with bootstrapping (in a pejorative way) reflecting either contempt of not taking venture-styled risk or a lack of understanding that there’s other ways of generating growth.

I’m not knocking either the venture community or those who choose a lifestyle business. It seems to me we do need to create some elbow room for a boostrapped venture as a genuine alternative to the other two funding models.

I love telling people about OnePriceTaxes.com and Fusion3, both North Carolina companies and Flywheel clients. I’ve worked with these companies to validate their business models and drive customer and revenue growth all while self-funding. Both companies may be easily be worth $25MM to $100MM in the coming years without ever raising any venture capital. 

OnePriceTaxes.com provides a Software-as-a-Service platform that facilitates the preparation and filing of individual tax returns. The founding members worked lunches, nights, weekends and vacations for 5-6 years to build an industry-leading tax product. With the addition of a partner-centric distribution model, OnePriceTaxes.com is thriving. The executive team is working full-time for the company and has secured high-profile multi-year distribution partnerships with major tax preparation brands including Jackson Hewitt and expanding into partnerships with online financial services companies.

3D Printer manufacturer Fusion3, based in Greensboro, NC,  graduated from Groundwork Labs in Summer of 2014.  Fusion3 designed a printer that’s disruptive to the 3D industry by providing print quality, speed and reliability unheard of in printers at its price. The company had tremendous sales results in its first year of operation thanks to a great product, adoption of a just-in-time manufacturing model and focused / disciplined marketing.  The company enters 2015 with an aggressive business plan without needing to raise external capital.

Depending on your timelines and the capital needed to grow your business, the founders should remember that there’s another option: self-funding your next startup.