Because of AI, the new startup flex will be how little VC money you raise

One way to get a big burst of attention for any company: A splashy funding announcement with a big valuation.

What we think we’ll see more of in 2027: Companies announcing that they’re not raising capital. Not because they can’t, but because they don’t need to. 

Chris, one of the authors of this piece, is an early case study in a pre-AI era. He was a practicing physician when he started his company, Access Physicians, in 2011. He and his three cofounders had an idea to bring telemedicine to hospitals that had historically been slow to adopt new technology. Given their experience with health systems, they knew that it would take time to pressure test the model, so they didn’t want to raise capital too soon. 

It ended up taking eight years to bring the solution to market and scale the technology nationwide. During that time, Chris, a newly minted cardiologist, worked as an every-other-weekend hospitalist to pay the bills. The starting salary he was giving up as a trained cardiologist: $550,000. Most of his peers in medicine thought he had lost his mind.

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But it gave the team the freedom to build a business on their own terms. The founders agreed not to take distributions, even as the business grew, and reinvest as much of the revenue as they could. Cash flow hiccups and working capital needs were managed through lines of credit. It was a massive founder sacrifice, but all for a very specific reason. 

When the time came to raise money, the founders reached out to a firm they already had a relationship with, Health Enterprise Partners. The company took in $9.3m in funding in exchange for giving up <30% of the company. The founders still retained heavy ownership personally and, perhaps more importantly, control of the company. This was their sole round of financing. 

The business was lean with a low burn rate, meaning a small team, and no wiggle room to be cash flow negative. The Northstar was growing at a good, respectable pace that might not have set the world on fire. But it could compound over five years at 42% annually and create meaningful value.

Two years later, in 2021, the company sold for $194 million. It was a great return for all parties, roughly a 5.5x.

How does Chris advise companies and fellow founders these days to achieve similar exits?

Well, he has zero regrets about all the years of bootstrapping. The most underrated benefit wasn’t the dilution avoided or the optionality preserved at exit. It was the clarity. Living in a capital-constrained, starvation-mode environment is brutal, but it forces discipline. Discipline around decision-making and action creates maximal efficiency as there is zero room for wasted time, money, or people. 

As he recalled: 

“Every day felt existential. To keep that cash flowing, we could not lose customers. We were maniacally focused on what our customers bought and what they told us to improve.”

Capital constraints force companies to focus. The team had to say no to many of the ideas that made it onto the proverbial whiteboard. Most companies will be tempted to chase shiny things, and well-meaning advisors or investors will constantly have suggestions. But learning to say no is crucial, and bootstrapping made that easier.