I lived the bootstrap life with my company and learned a lot. It has pros and cons that founders should consider when deciding whether it’s the route they want to go. One of the things I regularly encounter is the full-time team taking no salary.

Building a company is hard. It takes a lot of time and effort. Naturally, you want your team to be focused. This usually means you want them to be working full time on your startup. This sounds great in theory, but it often doesn’t work in the real world. If the team is working full time with no salary (i.e., for equity or deferred cash compensation), they still must fund their lifestyle. They need cash. Some people are fortunate enough to have cash reserves, but most don’t want to burn through their savings. What usually happens is that your team starts doing things on the side for cash as they go longer without pay. As people start doing side things, they lose some focus. As they lose focus, things slow down a bit. As things slow down, people get frustrated. You see where this is going.

Bootstrapping is a good path in certain situations. I did it (albeit painfully) and built my company to over $10 million in revenue. I also personally went without pay and couldn’t afford to hire the people I needed for long periods of time. Founders should avoid asking people to work full time without a salary if that’s going to last for a while. It’s usually not sustainable, and talented people with options (including cash) may be less inclined to accept these types of offers.

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Outlander Labs held a virtual pitch competition today. It was an opportunity for innovative startups in the Southeast to compete for a $100K investment. Lots of great applicants were whittled down to these six finalists:

• All Access Advance – Nashville, TN – A platform for managing touring artists, venues, and events in real time from a single dashboard
• City Shoppe – Austin, TX – A two-sided marketplace and software platform that helps consumers “shop their values” and helps local brands and retailers get discovered and reach a larger audience
• Linguix – Miami, FL – An AI-based writing assistant and language learning engine
• OrderNerd – Atlanta, GA – A platform for restaurants that consolidates third-party online ordering platforms onto one pane of glass
• Prospectus.ai – Charlotte, NC – A sales intelligence tool designed to create an internal relationship graph that companies can leverage by making introduction requests that will generate warm leads
• SportAI – Birmingham, AL – A mobile app integrated with AI that optimizes your fantasy sports lineups and, more importantly, helps anyone understand fantasy sports

The founders did an outstanding job pitching, and I enjoyed hearing about their companies. Can’t wait to track these companies—I’m sure they’ll all do amazing things.

It was a tough decision, but I’m happy to announce that City Shoppe was the winner! Congrats to City Shoppe and to the other founders for building interesting companies.

I connected with an early founder I’ve known for a few years. He recently completed raising a round of venture capital and is excited to get back to building his company. We talked about all the things that are top of mind. Naturally, recruiting headed his list. He finally has the capital to hire the people he needs to support growth. Unfortunately, he’s facing something he hadn’t planned on. “Recruiting in this work-from-home environment is hard. I can’t afford anyone.”

This founder is in a second-tier city where salaries are historically lower. His fundraising assumed that he’d pay market rate for new, local hires. But the work-from-home movement hasn’t eased, and it’s hindering his recruiting efforts. He finds himself in a situation where he’s competing not just with other local companies but also companies nationwide. Some larger companies are offering salaries and benefit packages he can’t come close to. This wouldn’t have mattered before, because these companies used to want their people to live near the mother ship. People who didn’t want to relocate often took jobs that paid less. Now, larger organizations are allowing employees to work from home, which has expanded the reach of their recruiting efforts.

We’re in a very early phase of determining what work will look like going forward. It was interesting to hear a firsthand account of how it’s affecting one founder’s efforts to build his team. I’m not sure how this will play out, and I’m very interested and will be watching it closely.

I shared my excitement about where Atlanta is headed in this post over the weekend. I’m excited to see numerous founders complete eight- and nine-figure liquidity events. I’m even more excited that they want to give back and help emerging founders. And I keep thinking about this founder group.

From a race perspective, Atlanta is unique, and I love that. A group of diverse (non-white) founders have sold their companies or raised funding rounds of eight or nine figures. That’s huge and a testament to what makes the city special. I personally know some of these founders, and it’s an amazing thing to see up close. They’re inspirations to so many other founders of color not only in Atlanta but around the country. In Atlanta, they help provide much-needed proximity to success for diverse founders. I have no doubt that their success will lead to many others being successful.

It struck me, though, that I know of only one female founder who’s exited or raised eight or nine figures. I can name a few men who’ve done it in the last eight months, but women? One in the last 5 years. I reached out to an investor and founder to find out if I’m missing something or just out of the loop. They both confirmed this is likely accurate (although a few women have raised seven figures—I commend them!). Atlanta is full of amazing female founders, so this realization is extremely disappointing.

People way smarter than me have put in years’ worth of groundwork in Atlanta to address this problem, and I salute them for those efforts. I’m looking forward to being part of the solution as well and can’t wait until Atlanta’s female founders are experiencing eight- and nine-figure acquisitions or capital raises!

Over the past eight months there have been a number of sizable (eight- and nine-figure) liquidity events for Atlanta startups. Companies have been acquired by larger companies or private equity firms or have raised a round of funding from venture capital firms. Many of the recent transactions have provided cash to founders and other early employees.

I was catching up with one of these founders yesterday. His company completed a nine-figure transaction. He told me all the ways he wants to help emerging founders. He has some great ideas about how to prepare founders for the ups and downs of the journey. He had his own early challenges obtaining capital and now wants to start investing in emerging founders so they don’t have to experience what he did. I’ve heard four or five other founders express similar thoughts over the past few months. It seems to me that Atlanta’s ecosystem is about to skyrocket.

One year ago, almost to the day, I shared my thoughts on what was missing for Atlanta entrepreneurs: more large liquidity events. Now, one year later, the city has experienced such events and they’re having the effect I predicted. Founders and other beneficiaries of these transactions are investing cash in early startups. And they’re sharing the knowledge they amassed during their journeys. Both are huge pluses for early founders and will do wonders for them, including helping to accelerate their success. As more startups are successful, more investors and talented people will be attracted to the city.

We’re in the very early stages of the impact these liquidity events will have on Atlanta’s startup ecosystem. I see big things on the horizon. The startup scene in Atlanta is about to reach a level we’ve never seen before. Buckle up! It’s going to be a fun ride!

When founders think about capital, venture capital or angel investors often come to mind. I’ve always thought, though, that customers are the best and cheapest source of capital (that’s why I bootstrapped my company). Most people think of selling a product or service as the only way to obtain money from customers. It’s not. (It’s just the most common way.)

If a company’s solution solves an extremely painful problem, customers may be willing to provide capital in other ways. If the solution creates an enormous amount of value, customers will pay for it and may also be open to becoming investors. When you think about it, it makes a ton of sense. Who better to understand the potential upside of a company than someone using its solution? Obviously, this is less likely if your customers are small businesses, but you never know. A company I’m familiar with has an amazing solution that has the potential to eliminate tons of labor expenses. A large customer that spends a lot of money on labor invested and helped refine the solution. The investment was a win–win.

Customers can be a great source of capital. This is just one example. Early founders, don’t forget about them when you’re thinking about raising capital.

As a founder, I noticed that our strongest team members shared certain characteristics. From that point on, I looked for those traits when hiring. I was hoping to find more rock stars. Many investors do something similar. Their successful investments may have things in common; if so they look for those traits—which could predict success—in future investments.

Early-stage founders should look for patterns too—especially when they get feedback from professional pattern matchers. Feedback from investors is super useful to a founder, even when it doesn’t result in an investment. You’re likely to hear way more noes than yesses if you’re fundraising, and the noes are a great opportunity to pattern match. After all, investors see tons of companies and have a good sense of what it takes to succeed. Founders should ask for the why behind every no. Individually, it may seem like an investor doesn’t “get it,” but collectively founders may see a pattern emerge and learn that the opposite is true: they themselves are the ones who don’t get it, have a serious blind spot, or have a gap in an area critical to the business.

No, pattern matching isn’t perfect; everyone can be wrong. However, it can be a great way to understand what risks outsiders see in the business. At a minimum, founders can address these risks in future conversations with investors, which will demonstrate that they’re self-aware and have their finger on the pulse of the business.

I spoke with an entrepreneur in Europe this week. She’s solving an interesting problem that her background makes her highly qualified to tackle. We talked about her journey to date, including her previous fundraising. Her experience was similar to that of other founders: raising capital from investors in Europe took a lot of time and energy, which slowed progress on her product. Toward the end of our chat, she expressed interest in learning more about US venture capital funds.

The pandemic has forced investors to ditch the face-to-face meeting requirement. It’s pretty much all video calls these days. I’ve seen how this is allowing founders to easily connect with investors in other states. Investors are now interested in writing checks into states and regions they used to ignore because of geographic distance. Boundaries have fallen and more investors are looking to invest nationwide.

My chat with this founder got me thinking. Will we see a surge in international investing as well? What does that mean for founders and investors? Making international investments is more complex (or so I assume). I’m not sure what direction this will go, but I’m excited by the potential and plan to pay more attention to this.

This week I listened to another investor share her views on early-stage investing. At this stage, there isn’t much of a company. It’s just a few folks, an idea, and maybe a product or service. There likely aren’t customers, users, or meaningful quantitative data to inform the investment decision. She believes early-stage investment is about evaluating the following:

• Narrative – What series of events did the founders experience or observe that led them to a problem or unique insight that others don’t see?
• Story telling – How well do the founders communicate how they view the problem, how they want to solve it, and the impact their solution will have?
• Team – How strong is the team? Do they have what it takes to solve the problem? Do they have sustaining motivation and passion to weather the ups and downs of the journey to the solution?

I really like how this investor approaches evaluating early-stage investments. It’s simple and makes sense. Early-stage founders should consider these three points when they’re deciding whether to pursue a problem and when they’re pitching.

This week I had unrelated conversations with two entrepreneurs who’ve bootstrapped their companies. They now have paying customers. One of them is looking to raise venture capital, and the other recently raised it. Bootstrapped companies survive on customer cash flow. There typically isn’t a surplus of cash on hand. This means founders are often focused on how they’ll keep the lights on. The runway is usually a few months long, if that.

Both founders are now faced with the possibility of an infusion of cash and 18 to 24 months of runway to execute a long-term vision. Until now, neither has had the luxury of thinking that far ahead. Homing in on their vision hasn’t been as smooth as they’d hoped. They’re finding it difficult to shift their mindset from survival to articulating the full potential of their company and a plan to get there.

Bootstrapping versus raising capital from investors isn’t a one-size-fits-all decision. It’s specific to the entrepreneur and their situation. Founders should know that the path they pick to obtain capital will influence how they’re able to think about their business. Bootstrapping fosters a survival mindset and thinking only a few months out. Raising capital from investors allows for long-term planning and execution.

There are exceptions to every rule and founders can be wildly successful on either path, but this is something founders should consider when they choose the source of their capital.