When to Say No to Venture Capital Instead of seeking financing, Ryan Smith spent four years bootstrapping to get his company off the ground. Here's why.

Ryan Smith knew he wanted to build a company he could grow over the long haul. So rather than race to find financiers in 2002, the co-founder and CEO of Qualtrics spent four years bootstrapping his enterprise survey provider from his dad's basement.

That low overhead helped the Provo, Utah, startup reach profitability almost immediately. As the company grew year by year, venture capitalists started circling, reaching a critical mass during year five. Smith says he fielded roughly 100 calls from venture capitalists and investment groups before he finally agreed to a deal in 2012.

What drew them to Qualtrics? A sound and profitable business model, according to Bryan Schreier, a partner at Sequoia Capital, who eventually succeeded, along with Accel Partners, in funding Smith to the tune of $70 million. "[Bootstrapping longer] focuses the company on creating a healthy business model at a very early stage," Schreier says. "It's hard to create a viable business model five years down the road. It's much easier if you're focused on making money from the start."