Building Without VC: How to Scale a Tech Company on Revenue
By Caleb Bak•July 22, 2024
Building Without VC: How to Scale a Tech Company on Revenue
"When are you raising your Series A?"
I've been asked this question hundreds of times about InfiniDataLabs and HireGecko. My answer surprises people: "We're not."
Both companies are profitable, growing 100%+ annually, and entirely bootstrapped. No VC money. No board oversight. No pressure to exit.
This isn't the path that gets celebrated in tech media. But for most founders, it's the better path.
The VC Trap Nobody Talks About
Venture capital isn't free money—it's expensive money with strings attached. Here's what nobody tells you:
The Math That Doesn't Work for Most Companies
VC Fund Economics:
VCs need 10x returns on successful investments
Only 1-2 companies per fund will be big winners
Your company must have potential to be worth $1B+
Anything less is a "failure" in VC terms
What this means for you:
Pressure to grow fast, often unsustainably
Can't build a "mere" $50M profitable business
Must swing for fences, can't hit singles
Exit pressure (IPO or acquisition), no lifestyle business option
75%
VC-backed startups that fail to return capital to investors
"Venture capital is an amazing tool for the 1% of companies building massive platforms. For the other 99%, it's a trap that destroys founder wealth and happiness."
The Hidden Costs
What VCs don't tell you:
1. Dilution Compounds
Seed round: You give up 20%
Series A: Another 20-25%
Series B: Another 15-20%
Series C: Another 10-15%
By exit, founders often own <10%
2. Preferences Stack
VCs get their money back first (1x-2x liquidation preference)
Common stock (yours) gets what's left
Company sells for $100M? VCs might take $80M, you get $20M
That's if you're lucky
3. Loss of Control
Board seats go to investors
Major decisions require approval
Strategy dictated by fund timeline (7-10 years)
Can't explore profitable pivots that don't lead to massive exit
4. The Treadmill
Must keep raising to survive
Each round is harder than the last
Miss growth targets? Down round or shut down
Can't stop and build profitably
The Revenue-Funded Alternative
Here's how I've built two companies without VC:
The Philosophy: Profitable from Day One
Rule 1: Charge customers from the start
No "we'll figure out monetization later"
Validate willingness to pay immediately
Forces focus on real value delivery
Cash flow funds growth
Rule 2: Growth funds growth
Revenue pays for salaries and infrastructure
Profit funds expansion
Never spend money you don't have
Slower but sustainable
Rule 3: Choose profitable customers
Focus on customers who pay well
Avoid penny-pinching enterprise deals
SMB and mid-market sweet spot
Quick sales cycles
The Four Phases of Revenue-Funded Growth
Phase 1: Services to Product (Months 1-12)
Start with services:
Consulting, implementation, custom work
High margins (60-80%)
Cash flow positive from month 1
Learn customer needs deeply
Why this works:
No runway pressure
Pay yourself immediately
Validate market need
Build relationships
InfiniDataLabs Example:
Month 1-6:
Custom AI consulting projects
$15K-50K per project
3-4 projects simultaneously
Revenue: $180K, Profit: $120K
Month 7-12:
Identified common patterns
Built reusable components
Started productizing
Revenue: $450K, Profit: $290K
Phase 2: Hybrid Model (Year 2)
Mix of services and product:
70% services revenue
30% product revenue
Use service profits to fund product development
Product has lower margins but scales better
Key Metrics:
Services pay the bills
Product builds the future
Both must be profitable
Maintain 40%+ overall margin
Year 2 Results:
Revenue: $1.8M
Services: $1.26M (70%)
Product: $540K (30%)
Profit: $720K (40%)
Team: 8 people
Phase 3: Product-Led Growth (Year 3-4)
Shift to product focus:
60% product revenue
40% services (higher-value only)
Product margins improving (scale)
Services margins stay high (selectivity)
Investment areas:
Product development
Marketing and content
Customer success
Sales team (for enterprise)
Year 3-4 Results:
Revenue: $5.2M
Product: $3.1M (60%)
Services: $2.1M (40%)
Profit: $2.1M (40%)
Team: 25 people
Phase 4: Scaling Product (Year 5+)
Product-first company:
80% product revenue
20% strategic services
Strong unit economics
Repeatable sales motion
Current State (InfiniDataLabs, Year 6):
Revenue: $12M annually
Product: $9.6M (80%)
Services: $2.4M (20%)
Profit: $4.8M (40%)
Team: 45 people
No VC required. Fully profitable. Founder still owns 100%.
Revenue-funded growth is slower than VC-funded, but you maintain control and keep the upside. A $50M profitable business where you own 80% beats a $500M business where you own 5%.
The Hard Parts Nobody Talks About
Bootstrapping isn't easy. Here are the challenges:
Challenge 1: Slow Growth in Early Days
The reality:
Can't hire ahead of revenue
Must be ruthlessly efficient
Growth limited by cash flow
Watch competitors raise millions
How to handle it:
Focus on your own race
Build sustainable business
Remember: most VC-backed companies fail
Slow and steady wins
Challenge 2: Doing Everything Yourself
The reality:
You wear all hats initially
Sales, marketing, product, support, finance
60-80 hour weeks
No team to delegate to
How to handle it:
Hire slowly but strategically
First hires: what you're worst at
Automate everything possible
Say no to distractions
Challenge 3: Saying No to Growth Opportunities
The reality:
Can't pursue every market
Must focus on what you can afford
Watch opportunities pass by
Patience required
How to handle it:
Focus beats breadth
Own one niche first
Expand only when dominant
Document opportunities for later
The Strategies That Work
Strategy 1: Start with High-Ticket Services
Why it works:
Immediate cash flow
Learn customer needs
Build reputation
Fund product development
Pricing:
Consulting: $10K-50K projects
Implementation: $25K-100K
Retainers: $5K-15K/month
Don't compete on price
Strategy 2: Build a Moat Through Specialization
Why it works:
Easier to dominate niche
Command premium pricing
Word of mouth works better
Less competition
How to choose:
Industry + Use Case + Tech Stack
Example: "AI for healthcare compliance"
Not: "AI consulting" (too broad)
Strategy 3: Focus on Profitability Over Growth
Why it works:
Profit funds future growth
Less stress, more control
Can weather downturns
Attracts better customers
Target Margins:
Services: 60-80%
SaaS Product: 75-85%
Hybrid: 50-65%
Never below 40%
Strategy 4: Hire Only When Profitable
Why it works:
No layoffs (terrible for morale)
Sustainable growth
Each hire is an investment
Team knows company is stable
Hiring Rule:
Revenue to support new hire for 6 months
Hire only when growth is constrained by capacity
Hire great people, pay well
Small, high-performing team beats large mediocre team
I've never done layoffs in 6 years. Team stability is a competitive advantage. VC-backed competitors burn through talent.
Real Numbers: What's Actually Possible
Let me show you what revenue-funded growth looks like with real numbers:
HireGecko Journey (2019-2024)
Year 1 (2019): $120K Revenue
Just me, nights and weekends
Small consulting clients
Proof of concept
Profit: $85K
Year 2 (2020): $380K Revenue
First hire (developer)
Early product version
COVID actually helped (remote hiring boom)
Profit: $180K
Year 3 (2021): $1.2M Revenue
Team of 5
Product-market fit found
100% YoY growth
Profit: $480K
Year 4 (2022): $3.2M Revenue
Team of 12
Strong word of mouth
Started outbound sales
Profit: $1.3M
Year 5 (2023): $7.8M Revenue
Team of 18
Expanded to enterprise
144% YoY growth
Profit: $3.1M
Year 6 (2024): $14.5M Revenue (projected)
Team of 24
Dominant in niche
86% YoY growth
Profit: $5.8M
Total capital raised: $0
Total profit extracted: $11.8M
Founder ownership: 100%
Compare this to a VC path:
Raise $10M over 3 rounds
Grow faster (maybe)
Own 30% by exit
Need $50M+ exit just to match my outcome
Most don't get there
When VC Actually Makes Sense
I'm not anti-VC. It makes sense for specific situations:
Raise VC if:
1. Winner-Take-All Market
Network effects
First to scale wins everything
Examples: Social networks, marketplaces
Speed matters more than efficiency
2. Massive Upfront Capital Required
Building infrastructure (data centers, etc.)
Hardware companies
Complex R&D (biotech, deep tech)
Can't bootstrap the initial investment
3. Land Grab Opportunity
New market opening up
Must capture market share quickly
Competitors will also raise
Examples: New platform (iOS app store in 2008)
4. You Want to Swing for Fences
Fine with high risk/high reward
Comfortable giving up control
Want to build $1B+ company or nothing
Exit-focused (not lifestyle business)
If none of these apply, consider bootstrapping.
Your Action Plan
If you're thinking about raising VC:
Ask yourself:
1. Can I start with services revenue?
2. Is my market winner-take-all?
3. Do I need massive capital upfront?
4. Am I okay with giving up control?
5. Do I need to grow at all costs?
If answers are mostly "no," bootstrap.
If you're committed to bootstrapping:
Month 1-3:
Start with high-ticket services
Get first 3-5 clients
Charge premium prices
Validate market need
Month 4-12:
Build repeatable service offering
Hire first team member
Start productizing common patterns
Maintain 50%+ margins
Year 2:
Launch MVP product
Keep services running (cash flow)
Invest profit in product
Don't scale services team
Year 3-5:
Shift to product focus
Scale sales and marketing
Build product team
Maintain profitability
The Bottom Line
I've built two companies to $12M+ revenue without VC. My co-founders and I own 100%. We're profitable. We make our own decisions. We sleep well at night.
Could we have grown faster with VC? Maybe. Would we be better off? Unlikely.
Here's what matters:
**Control:** We decide strategy, not investors
**Wealth:** We keep 100% of profits and equity
**Sustainability:** No pressure to exit
**Happiness:** Build the business we want
Venture capital is a tool, not a requirement. For most founders, revenue is a better funding source than investors.
The question isn't "how do I raise VC?" It's "how do I build a profitable business?"
Answer that, and you won't need VC.
*The best businesses are built on customers, not investors.*
Serial entrepreneur, founder & CEO of InfiniDataLabs and HireGecko, COO of UMaxLife, and managing partner at Wisrem LLC. Building intelligent solutions that transform businesses across AI, recruitment, healthcare, and investment markets.