Bootstrapping to a Billion Dollar Exit: Insights from SimpleNexus’s Founder

VC-backed companies get a lot of the limelight, but as Trent Mano from Convoi Ventures put it, “Bootstrapped businesses are the sexiest businesses!” The highlight for bootstrappers at Utah Tech Week 2024 was Trent’s interview with Ben Miller, co-founder of SimpleNexus, which sold for $1.2 billion. 

What struck me about this conversation is how humble Ben is. He didn’t come speak to show off but simply to share his honest experience and how it all played out. It’s a tremendous story with a lot to learn from. Here are some key takeaways from their conversation:

Should I Raise?

SimpleNexus’s founders shopped around for VC money early on because that’s what they were always taught to do in business school. However, it never made sense because they were always revenue generating. Why would they give up 20% of their company for two months’ worth of revenue? You’ll always negotiate from a position of strength when you don’t have to take other people’s money.

Customer Funded

Trent quoted Jon Jessop who describes bootstrappers as "multi million ARR, customer funded." Bootstrappers raise money too, but they do it from customers. By saving time from investor conversations, you can fund your business from customers.

Bootstrapped Exit Strategy?

Build the best business and you'll always have exit strategies. There’s a reason most VCs can justify an exit strategy as a private equity deal. If your business makes enough money, you don’t need a strategic acquirer. Businesses that make money are always appealing.

Luck and Timing

Luck and timing always plays a role. It’s hard to predict and it’s often out of our control. Big macroeconomic and industry trends are huge drivers. For SimpleNexus, they started with an app that helped consumers estimate their mortgage payments. This was a tremendous lead generation service for mortgage lenders. It was a simple MVP they could build over a weekend and serve an industry notorious for being paper-based. When they started, the average mortgage lender was age 56. A lot of younger people were coming into the industry who expected better tech. This was perfect timing for SimpleNexus.

Hold Your Breath

Don't sell out too early. If you’re making money, you can get exciting offers early on. Knowing the worth of your company and your vision will give you the courage to say ‘no’ now in exchange for a much bigger ‘yes’ later. SimpleNexus’s founders were offered $10M early in their business. While that was a lot for them early on, it pales in comparison to what it became when they sold for $1.2B!

Dangers of VC Money

If you’re bootstrapped, you can have ups and downs in annual revenue. Make $300K the first year, $1M the second, and $500K the third? You can weather that if you’re bootstrapped, but if you took VC money in year one of that scenario, you’re toast. That VC money is dangerous before you have a few million dollars a year.

The Startup Stack is bootstrapped. It’s a tough path, but we love having the creative freedom to build the most founder-centric platform possible. It’d be nice to have gobs of cash in the bank, but we’re grateful for this journey together and thank you for supporting us.