The purpose of venture capital is to assist businesses in achieving greater growth and scalability than they could on their own. But is this always the case? According to new research, for some early-stage companies, it makes little difference.
According to a new report from startup lender Capchase, SaaS startups with between $1 million and $15 million in annual recurring revenue (ARR) experienced virtually identical growth rates over the past year, regardless of whether they raised venture capital. The report examines the financials of 900 early-stage startup customers of Capchase in the United States and Europe, of which 49% were bootstrapped and 51% were VC-backed.
The report found that venture-backed SaaS firms grew by 42.8% annually between June 2022 and May 2023, compared to bootstrapped companies, which grew by 44% during the same period. The numbers are close, but given that venture-backed startups raised external capital, it is safe to infer that they spent more to achieve the same growth rate as their peers who were self-funded.
After speaking with some bootstrapped founders, Miguel Fernandez, co-founder and CEO of Capchase, started to understand why the numbers for venture-backed startups and bootstrapped businesses were so similar.