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.