Bootstrapping Your Startup: Do You Really Need Early Investment?
Published in 2014, this chronicle by @ndemoor details the mechanics of building a profitable, self-funded business without venture backing.
Core Principles for Independent Builders:
Charging customers from day one acts as the ultimate filter for building software that solves genuine, high-urgency problems.
Keeping fixed overhead low and leveraging lean infrastructure allows founders to stay alive until market tailwinds kick in.
Small, repetitive improvements in customer retention and conversion rates yield massive returns over multi-year horizons.
Community Debate Themes:
The community focused on B2B customer acquisition channels, cold email vs SEO distribution, and balancing full-time employment with side-project development.
CATEGORY Bootstrapping & MRR →
HISTORICAL ERA Cloud & Mobile Era (2014–2019)
COMMUNITY SCORE ★ 50 points
TOTAL DISCUSSIONS 50 comments
We bootstrapped our app www.staffsquared.com.
While there are limits on what we can do using profits from our main business and income from the app as it grows, I love the fact that we got the app off of the ground organically. I think spolsky said that when you bootstrap you can only grow the business in line with revenue - which is of course true and a difficult trick to pull off.
I think more importantly, the process of bootstrapping forces you to go about recruitment, sales, marketing, development etc etc in a way that is more innovative (as opposed to just throwing money at problems to make them go away). While you won't want to scale a company using these money saving techniques, they are still excellent tools and skills that can be applied to a business at any stage and put the founding team in to a mindset of sustainability.
I've been thinking about this a lot, too. Is there any startup that inevitably needs early investment? Except for biotech or massive big data startups of course.
Because if your product does something new, you can ALWAYS get PR.
What I've seen is that with funding, founders don't focus on the essentials anymore. They are not as careful with whom to hire, they don' think as much about what marketing channels to spend money on. However, without funding, you are basically forced to focus on the very core of your startup, every decision needs to be very thoughtful and you will need to understand every process in your startup in-depth.
A friend of mine once said, funding should never be a lifeline, - it should be motivated by a fast expansion opportunity.
One big reason early startups take on investors is to let the entrepreneurs spread the risks. When bright coders (or other high-salaried individuals) forego a high salary in favor of founding a startup they are raising their investment in the business month by month.
Smart investing means balancing your portfolio. Very soon, the kind of oportunity cost these founders invest in their venture dwarfs the rest of the portfolio. Any bank account is a safer investment than most if not all startups.
More capital raised initially means more salary and less risk to the founders. The founders can pass on the ketracel white ... uh... money to their troops. If some capital deal does not decrease your risk, then just don't do it.
The book "The Incredible Secret Money Machine" (ISBN 0672215624) is my resource for bootstrapping advice. And I have to agree with Don Lancaster: try to bootstrap without early investment.
The case of Everpix is a great example. With an early investment it's very hard to keep track of your startup's feasibility. And your startup is tied to the original plan (your promise to investors). So it's very hard to make changes when you discover the startup plan isn't working.
Before i need some investment,but finding investment quite hard,most wanted stable company and resources.So i'm no choice working normal freelance job rather focussing to be next software in the market.Don't focus getting much customer but focus getting 1 to 10 customer then go big for investment.. 20k if somebody said bellow is so not much and can finish a few month operation..