The problem with your argument it that it rests on a false premise, that you should start the calculation of a $100M exit with the 1% chance you will raise funding. You should actually be multiplying this by the chance that you'll have a 100M exit. And I think far fewer bootstrapped companies have that outcome than VC funded companies. FWIW I don't think being VC funding is success, but adding fuel can certainly help it grow. Just because it didn't work out for you doesn't mean it isn't a powerful tool to a startup founder.
> And I think far fewer bootstrapped companies have that outcome than VC funded companies.
This is almost certainly true. But you're also likely to hold a fraction of the equity you'd hold in the case where you bootstrapped.
I find the 'raise nothing, hold all the equity, exit for >$1mm' (or don't exit and live a happy, very comfortable life) far more enticing than 'raise money, hold a fraction of the equity, exit for $100mm', especially when you factor in the lifestyle differences between the two scenarios.
That said, I recognize that other people hold different opinions. More power to you folks, but—at least for now—I'm sick of the rat race.
The funny thing is that the value provided by YC style funding isn't in the funding itself. It's in the network provided by the VC (and to a lesser extent the marketing).
This is best reason to enter YC with an established (but small) company: to turn your small "life style" size business into something with a very large reach.
I'm sure that the latest batch of YC companies would agree with my reasoning. You give YC a fraction of a small pie to greatly increase the chances of your plan to turn it into a big pie.
My 2-5 year plan: build a $2 - $5m business (and the core team) in Europe around an idea that has the potential* to be a $500m+ business in America: then give YC a slice in exchange for their advice.
* What I'm working on has massive niche in a sector far away from the web. So we can build the idea, business and tech out away from the prying eyes of the incumbents. Now most of the incumbents will have trouble competing with us (different strategy), with one massive exception. If they knew about the niche we knew about, they would fill it (the niche along can support several $100m + companies).
