2017 Bootstrapped Sentiment Survey

Part II: The Strengths & Challenges of Bootstrapped Entrepreneurs

Mainsail conducted the Bootstrapped Sentiment Survey for the 7th consecutive year at the end of 2017. As in years past, we’ve focused on understanding the sentiment of bootstrapped entrepreneurs as it relates to their own business and the macroeconomic environment. This year, we also took a deep dive into what makes these entrepreneurs and their businesses successful.

As investors in bootstrapped, growing and profitable software companies, typically outside Silicon Valley, we recognize that these companies have unique strengths and challenges, largely owed to their disciplined approach to growth. This year’s survey was specifically designed to better understand these attributes that allow bootstrapped companies to overcome challenges and play to their strengths. Additionally, we asked about the role that geography plays in the success of their business which you can read about in Part I, The Best Places to Bootstrap. We hope other like-minded entrepreneurs can benefit from these insights to better understand the performance of their own businesses.

The Top 3 Strengths of Bootstrapped Entrepreneurs

1. Industry Experience:

The majority of entrepreneurs have prior experience in the market for which they built their product.

Of entrepreneurs have prior experience in the industry before founding their company.

Founders who worked at another software/service company in Education and Human Resources are the most likely to apply their experience to start a company of their own.

Real Estate, Insurance, and Healthcare are the three industries with the highest likelihood to have founders who came from a company that had a need for the type of software/service they built.

2. Financial Discipline:

Bootstrapped entrepreneurs are 2x less likely to run their business with negative EBITDA margins as their funded counterparts, and reach breakeven by $10M in revenue.

3. Team Building

94% of entrepreneurs have defined their mission, vision, culture, and values and 56% state that culture and team building are one of the strategies that have allowed them to bootstrap.

The Top 3 Challenges of Bootstrapped Entrepreneurs

1. Under investment in Sales & Marketing

Bootstrapped companies tend to underinvest in sales & marketing and struggle to hire functional leaders for these roles.

What executive hire do you wish you could make if you had more capital?


Sales Leader

If you could start over, what executive hire would you make sooner than you did?


Sales Leader

What’s the hardest executive hire you’ve made?


Sales Leader

What’s your most critical hire in the next year?


Sales Leader

2. Balancing Profitability Over Growth

Companies growing >60% are ~2x more likely to have negative EBITDA margins compared to companies growing <60%.

3. Access to Talent & Hiring

Over 50% of entrepreneurs believe that finding good people to hire will be their biggest challenge in 2018, especially during the startup phase of 5-100 FTEs.

Complete Survey Results

See below for everything from how frequently and why entrepreneurs open a second office to the strategies that they’ve implemented to bootstrap their growth. We’ve also broken out the demographics and attributes of the 330+ bootstrapped entrepreneurs who responded

Entrepreneur Sentiment

1. Do you expect the U.S. economy to be better or worse next year

2. What best describes your expectations for your business in 2018?


3. Will you hire more or fewer people in 2018 than you did in 2017?

4. What are your most important areas of investment in 2018?

5. What do you expect to be the biggest challenge(s) for growing your
business in 2018? (select all that apply)

Founding Team

6. Are you a member of the founding team?

7. Did you have prior experience in the industry before
founding your company?

8. Do you have a co-founder?

9. What is the relationship with your co-founder?

Company Profile

10. How is your product or service delivered? (select all that apply)

11. What is your average deal size?

12. How many full-time employees currently work at your company?

13. What industry is your company in?
(showing only top 10 most frequent responses) 

14. What year was your company founded

Geography & Office Location

15. Do you have multiple offices across the country or internationally?

16. Why did you open a second location? (select all that apply)

17. Do you have offices overseas? If so, why?


Motivation for Bootstrapping

18. Why did you decide to bootstrap your company?
(select all that apply)

19. Have you ever raised money from any of these sources?
(select all that apply)


20. What strategies have you implemented to help finance your
growth as a bootstrapper? (select all that apply)


21. Have you ever received capital investment for your business from an institutional investor? (e.g. venture capital firm, private equity)

22. What was the most important factor in picking your lead investor?

23. How would you categorize your latest round of funding?



24. Do you have access to top talent locally?

25. What executive hire do you wish you could make if you had more capital?

26. If you could start over, what executive hire would you make sooner?

27. What’s the hardest executive hire you’ve made?

28. What’s your most critical hire in the next year?


29. Does your company have a CFO?

30. At what revenue milestone did you hire a CFO?

31. Does your company have defined mission, culture and values?

32. What percentage of your team is engineering?

Financial Performance

33. What percentage of your revenue do you spend on sales and marketing?

34. How fast did you grow revenue in 2017?

35. What is your 2017 revenue?

36. What best describes your EBITDA?

About the Bootstrapped Sentiment Survey

The survey was conducted between November 15 – December 28, 2017, and resulted in 329 completed responses. This is the seventh annual Mainsail survey and is intended to help us continue to understand the needs and perspectives of companies that Mainsail invests in and helps to grow. The survey was conducted via an online survey sent to entrepreneurs and senior executives at U.S.-based companies.

For the purposes of this survey, “bootstrapped companies” are defined as businesses which have taken no previous capital from venture capital firms, or other institutional investors. Qualification as a bootstrapped company was verified through a qualifying question.

About Mainsail Partners

Mainsail Partners is a leading growth equity firm that has raised over $750 in committed capital. Mainsail invests exclusively in profitable and growing software companies in the United States and Canada. We work in partnership with management to build our portfolio companies into market leaders. Our exclusive focus on bootstrapped companies has generated expertise and resources specifically relevant to helping companies like yours grow.