Three years ago, when we started making profit as a bootstrapped startup, I was stunned by how little money I could reinvest in my own company compared to a funded competitor. We paid ourselves 20% of the profit and paid 40% in taxes and reinvested the rest i.e. 40% into our business. Meanwhile, a VC-backed competitor could show losses and invest 100% of the revenue plus the $10 million or $50 million they raised from investors. In this essay, I explain you how screwed up the incentives are for bootstrapped companies and a solution to fix this:
Think Stripe Atlas for bootstrapped companies, a service that incorporates you in countries with favorable tax treatment for reinvestment, where you only pay taxes on founder distributions, not on profits you reinvest.
The Hidden Tax Penalty Killing Bootstrapped Startups · HackerTrans
Think Stripe Atlas for bootstrapped companies, a service that incorporates you in countries with favorable tax treatment for reinvestment, where you only pay taxes on founder distributions, not on profits you reinvest.