New business Venture startups

For many startups, raising a round of funding is a day of celebration. It’s exhilarating knowing that someone believes enough in your idea to put money behind it. Raising a round, though, doesn’t mean that a startup has “made it” or that the entrepreneurs behind the venture are on their way to tech stardom.

It isn’t always, though, the best route for every startup. In the words of Christian Chabot, CEO and co-founder of Tableau Software, a Seattle-based data analytics and visualization software company, taking venture capital is like having a loan. “Do you feel brilliant and motivated after you take out a big loan?” he asks rhetorically. He and his co-founders avoided venture capital at all costs during their early days and managed to break through the $100 million revenue milestone in December and now has more than 700 employees after nearly nine years of doing business.

Having just completed a two-year stint as an associate partner at Softbank Venture Capital, Chabot says he had seen firsthand what happens to young companies that raise too much money too fast. “I also saw what happens when venture capitalists get too much control of a missionary technology venture – and it’s generally not good.”

Chabot’s venture capital experience aside, his co-founders — the technology and development minds behind Tableau — were naturally skeptical of investors, leading the team to bootstrap from day one.

While the company did eventually raise a $5 million Series A in 2004 and a $10 million Series B in 2008, it all begin with three entrepreneurs who brought a few thousand dollars each to the table. Even today, every dollar of venture capital Tableau has raised is in its bank account, says Chabot. And raising that money was all about timing.

We spoke earlier this month about how Tableau managed to grow its $100 million business without spending any venture capital. Chabot provided a few key nuggets of advice for entrepreneurs looking to bootstrap to success.

“I believe it’s a myth that you need to bring a lot of capital to the table in order to be able to bootstrap, ” says Chabot. “Frankly, I don’t think most people are willing to make the sacrifices that you need to make to be an entrepreneur and to bootstrap a company from nothing.”

Chabot says that the Tableau trio brought modest amounts of money to the table, to the tune of a few thousand dollars each, “But most importantly, we worked for free.”