Editor’s note: This is the first of a three-part post about bootstrapping by , a Research Triangle entrepreneur turned academic. He is a Visiting Scholar at UC-Berkeley, Senior Research Associate at Harvard Law School and Director of Research at the Center for Entrepreneurship and Research Commercialization at Duke University. Follow him on Twitter at @vwadhwa

By VIVEK WADHWA, Special to LTW

DURHAM, N.C. – In a , I discussed why the odds of a rookie entrepreneur getting seed financing from a VC are very slim. The reality is that less than 5 percent of venture money goes to seed-stage startups; VCs typically invest when a company has a working product, a tested business model, and a strong management team.

It’s the entrepreneurs who take the risk; not the VCs. They beg and borrow money from friends and family, max out their credit cards, and sometimes make do by living at home with their parents. Yet, very often, it’s the VCs who get the glory. I don’t think that’s fair. So in this post, I’m going to highlight three bootstrapped companies, and share the advice of their founders. In my books, entrepreneurs are the real heroes—those who make the innovation happen. They are the ones you should be following on Twitter and learning from, not boastful VCs.

Take Chicago-based

Its founder, Jake Nickell, built a very profitable $40 million business by bringing crowdsourcing to the mundane world of t-shirt design. Threadless sells millions of tees every year and has been growing annually at double-digit percentage rates. It was founded in 2000, after Nickell, then a 20-year-old web developer, won a t-shirt-design contest. With an investment of $1000, he built a website to which people submitted t-shirt designs, and the favorites were printed in limited-edition runs. In 2006, the company had gained traction, was generating nearly $10 million in revenue, and took a small investment from Insight Venture Partners.

My Q&A with Jake:

Would you have taken a VC investment if you could have, when you started?

Definitely not, as I was starting a hobby and not a business. It’s kind of like asking if I would consider a VC investment to help me start learning to skateboard. Sure, I’d spend a couple hundred bucks on a board, some pads and maybe some materials to build a ramp, but I’m not looking for millions or even hundreds or tens of thousands to just create something for fun.

Even if I was starting a business, I don’t think I was raised that way or have that type of personality. I didn’t even have my first credit card until I was maybe 23, so I really just don’t do well with spending money I don’t have.

Why did you take investment and how has that experience been? What changed after taking VC?

We were having major operations trouble and weren’t incredibly excited about fixing it ourselves. I never finished college and my background is more in art/programming. In ’05 if you ordered a tee during our holiday sale, you’d probably get it three weeks after Christmas.

We had a few choices… outsource all that stuff (but still have to manage it), work with consultants to help us figure out what to do, or to get someone who knew what they were doing to invest in the company and help us. We felt that last option was best.

The experience has been great. There was no shortage of interest from VC firms in investing in us, so we got to be pretty choosy about whom we worked with. We got really comfortable with Insight as they had some programs in place for helping us, and we got along really well with them. A lot has changed after taking the VC—we are now operationally sound and actually ship orders out in a decent timeframe!

What advice would you give fellow entrepreneurs?

If you want your life to be fun as an entrepreneur, I suggest going into it with realistic expectations and to measure your success in different ways than financially. I’ve done well financially with Threadless, but if I had to give up one thing, the money would be the first thing to go. The happiness, relationships, enrichment in others’ lives, the community that now exists; the opportunities brought to artists—that’s the success that really matters for Threadless. Build your business in a way that lets you say that, and mean it too.

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