No, Bill Gates did not start Microsoft with no money. He came from a well-off family, attended a private school, and had access to advanced technologies. While he didn’t use venture capital to start Microsoft in 1975, he and his early collaborators had certain advantages.
How Much Money Did Bill Gates Raise to Start Microsoft?
Microsoft was initially bootstrapped without venture capital. Bill Gates mentioned in a 2013 interview that they didn’t need much capital because selling software in volume had favorable economics. While they later took a small amount of venture capital, it wasn’t crucial for their success. They eventually sold 5% of the company for a million dollars just to have a venture capital company on their board for advice. The money was not for capital but to strengthen the team.
Here’s what Bill Gates said about it in an interview in 2013:
“Software, if you can sell it in volume, has extremely favorable economics because the costs are quite finite, and you can scale the volume, in our case, to sell millions of copies – every Apple II Computer, Commodore PET, IBM PC had copies of our software, so our income went up a lot. We didn’t have to build any factories, we were cash-positive, and we didn’t have a year where we lost money. For the first few years, Paul (Allen) and I worked for free, but after that, we were just generating cash. We eventually gave away, or sold, 5% of the company for a million dollars at a 20 million dollar valuation, just to get a venture capital company to join our board and give us some adult advice about various things, which was quite helpful. We picked one in the valley, a guy named Dave Marquardt came on our board and did a fantastic job”