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If you visit Silicon Valley or New York today, evidence of the latest internet boom is evident wherever you go. The venture capital is flowing and startups are partying like it's 1999.

Is a bust right around the corner? Only time will tell, but for more than a few startups, all of the investor money is a distraction best avoided.

Bootstrapping can bring with it challenges, and while it isn't nearly as unsexy as it may have been a decade ago, trying to build businesses without investment often appears far less attractive, particularly given the ease with which promising startups can raise capital today on favorable terms.

The rewards of bootstrapping, however, can be significant. Just ask GitHub, the popular provider of a hosted distributed version control system. Launched in 2008, GitHub has over 1m users and hosts more than 2m repositories. It's so popular in some developer circles that a GitHub repository often serves as a resume. Most importantly, GitHub is a profitable, fast-growing enterprise.

Up until now, GitHub had achieved its accomplishments without venture capital funding, something that GitHub's founders have spoken about publicly, and have been quite proud of. But $100m apparently changes everything, particularly when it's being offered by one of the most prominent venture firms in the world, and GitHub yesterday announced that it has raised $100m from Andreessen Horowitz. According to Bloomberg, the investment is the firm's largest to date, and valued GitHub at a whopping $750m.

Hypocrisy? Some are obviously suggesting that GitHub sold out. The more reasonable argument is that businesses evolve as they grow, and the opportunity to raise $100m at an exorbitant valuation is one that few entrepreneurs with a similarly-situated company would be wise to pass up.

According to GitHub co-founder Tom Preston-Werner, his company began talking with Andreessen Horowitz late last year, and became convinced that the opportunity for GitHub was even more significant than it might appear. Under a "GitHub Everywhere" vision, GitHub has the potential to play a larger role within organizations, supporting a "collaborative software creation model that’s really special." To pursue "GitHub Everywhere," funding becomes an attractive proposition. "You can be much more creative when you're not so focused on the money aspect of things," Preston-Werner explained.

While hustling to make payroll every month can be a tough grind, staying focused on the money is arguably a useful thing. When money is of no concern because there's seemingly so much of it laying around, a company is more likely to take a dangerous path that takes it away from the real market. In other words, companies often begin thinking bigger but not smarter.

Will GitHub manage to think bigger with $100m in the bank, but retain the bootstrapping smarts that gave it the traction to raise such an amount in the first place? Time will tell.

Patricio Robles

Published 10 July, 2012 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

2419 more posts from this author

Comments (3)


William Kosko

Wish I could get funded that much. My ideas are worth a few of those 100m's

over 4 years ago


Deri Jones, CEO at SciVisum.co.uk

The history of the bigger VC investments is not entirely great - look at some of the companies Microsoft has bought over the years and lost $Bs of value on.

In the case of GitHub - the investment is clearly not to help them do more of what they already do, as they're doing that well and profitably anyway.

The big money is a punt to take them into a different kind of player altogether - and that is I guess the big if: whether an organisation can re-invent itself and be succesful as something different to what it started as.

Yes, it's easy to spend new money doing new stuff ! But to change the culture and vision across the board, can GitHub do that?

over 4 years ago


Mikhail Kulakov

I was a little bit surprised by such news. For Github it was kind a philosophy and original chip that they are bootstrapped company. They build a unique culture which is based on doing things differently and not having to answer to investors.
It would be really sad if that goes down the drain – and for what? Not sure what goals they think they need a 100m for… Most software companies can´t convert that amount of money into great software anyway.

about 4 years ago

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