I would like to dispel a few rumors. I'm not opposed to venture capitalists. I don't think angel investors are really demons. I don't even think that everyone should or even could “bootstrap” their business successfully. To prove it, I'd like to tell you about the #1 reason that you and your partners might need to start shamelessly promoting your half-baked business idea to anyone with cash to spare: Half-Life.
Just as the word “startup” has become synonymous with venture capital, so it has also become synonymous with “techie.” Perhaps there is a connection there. The general consensus is that new startups are almost always a web app, a social experience, or a computer that fits on the head of a pin. Now, that's not always true. But, if it were the case, then I would have to burn my own book and confess that every startup (seeing as how they're [hypothetically] all tech-driven) ought to polish their pitch to the VC's and get busy.
Technology is a fast-growing field. I hope that statement doesn't shock anybody. Moore's Law tells us that technology doubles every 2 years (whatever that means). But the speed that startups need to be concerned about is not the speed at which processors are improving or the cost of RAM is dropping. The speed that tech-related startups need to be concerned about is the speed at which their idea loses its novelty. It's the speed of a startup's half-life.
If you are using a product, become frustrated, and imagine a way that you could do it better, then there is a rate that you need to determine: How long will it take me to build this product, go to market, and then build a critical mass? Then, ask yourself if anyone will care by that point. Seriously! Will anyone care that you perfected the art of head-cleaning a VHS if it took you a decade to gain market share? Will anyone care about your retractable-wire-headset once blue-tooth hits mainstream? These are technologies that got defeated, not by any competitor, but by a half-life. In a race to wow people, they lost.
When it comes to marketing technology, I think that I can safely say that “social” is somewhat of the buzz word these days. And social is blindingly fast. Social changes daily. And, despite the phenomenons of “viral” spreading ideas, social costs money, too. Social is not free. You cannot plan to create a social phenomenon without some push… not quickly anyway. Speed, after all, is the name of the game.
So, when can you not bootstrap it? If your product is built on a social platform (Twitter or Facebook) get funded. If your technology depends on another technology's weakness (like head cleaners or corded hands-free sets) get funded. If you're afraid to tell anyone about your idea (investor's included) because you're afraid they'll steal it, then get funded. Guess what, you'll have to tell someone sooner or later in order to get customers, and if it really is that good, someone else will copy it and use VC to follow you quickly to market and speed past you in market share. If speed can beat you, then you need to have speed.