Mo money, mo problems.
It’s not just Notorious B.I.G.’s posthumous hit track—it’s also the logic behind why some fast-growing Boston tech companies are choosing to forgo chasing after venture capital. For those companies, doing so would simply distract from focusing on building the best product possible—and ultimately, they strive to achieve financial sustainability by way of their customers alone. While the challenges of bootstrapping are many, so are the benefits: Those entrepreneurs maintain complete ownership and control over the vision and the product, free from investors’ influence. That leaves a lot of room to innovate.
Here are a handful of Boston-area tech companies that are either bootstrapped or have raised very little outside funding—and plan to stick with it.
This online video hosting and analytics company has been around for nine years, and has grown to serve 150,000 customers and have a team of 32 employees without raising a penny from VC firms. The only funding Wistia has banked is $1.4 million from individual angel investors. That is, Wistia’s nearly a decade in business has been funded almost entirely by paying customers.
And the company says there are still no plans to raise any institutional money. While they declined to disclose their specific revenue details, Wistia did share that revenue has doubled or nearly doubled each year for the past three years. The company has never aimed for explosive growth, and freemium is a relatively new focus for Wistia—contrary to the path taken by many tech startups, which begin with freemium and hope to gain paying customers over time. “We did it backwards—when we first launched there was no free trial. We only launched a free version of Wistia about two years ago,” Wistia co-founder and CEO Chris Savage said in a recent interview.
CarGurus has the third-highest traffic rate among car-shopping websites despite having no national ad campaigns, and is reportedly considering an IPO this year. In 2014, the company—which was founded by TripAdvisor co-founder Langley Steinert after the company was sold to Expedia—raked in a revenue of $40 million. Meanwhile, the site has launched in Canada, and is working on expanding to both England and Germany in 2015. And CarGurus has achieved all of this without pursuing any VC funding to date. All initial investments have come friends and family—reportedly totaling about $4 million—and the team says there are no plans to raise institutional financing in near future.
This Westborough firm is one of the pioneers of electronic health records and a key player in Boston’s booming health care IT sector. But the EHR software provider, which employs 4,000, never received outside funding because CEO Girish Navani “couldn’t stomach the idea of someone else calling the shots, particularly if that someone else was ultimately looking to exit,” according to a recent Fortune report. Instead, Navani bootstrapped the company by selling some stock in a company he previously worked at. EClinicalWorks still no intention of receiving any in the future, and Navani has pledged that it will never go public. EClinicalWorks reported $280 million in revenue for 2013, and last year reached approximately $325 million.
Quietly, this Boston tech firm built revenue to nearly $12 million in 2014, without having ever taken VC funding. BuySellAds, which works with publishers and brand advertisers to help connect them with relevant audiences, employs a team of 18. Its main competitor, iSocket, was acquired in the fall, and a recent SEC filing showed that while that company was thought to have the biggest market share in the programmatic direct space, iSocket only saw $207,000 in revenue in 2013. BuySellAds, meanwhile, acquired BeaconAds and FusionAds in 2011, and last September, purchased Cupertino-based LaunchBit.
“Sacrificing customer service and satisfaction for growth to meet VC demands is not in our DNA,” CEO Todd Garland told me in an email. “Of course, we always consider opportunities and our options, but we’re profitable … It’s due to our philosophy of building a customer centered business for the long-term.”