November 18, 2016
Seattle Startup Week has already graced its audience — and our loyal Tech.Co readers — with insight on everything from Facebook and Twitter’s digital marketing advice to the benefits of boutique rose-flavored cotton candy. But the founders in and around Seattle have plenty more to offer on the one topic that any aspiring entrepreneur wants to know: How can they bootstrap their own company?
The jam-packed panel took this question to a whopping six founders, all of whom could share a unique Northwest perspective. They were: Aseem Badshah, founder and CEO of Socedo; Paul Ingalls, founder and CEO of Ripl; Early-stage investor Sanjay Puri, who co-founded 9Mile Labs; Avni Patel Thompson, CEO and founder of caregiver-hiring app Poppy; Ben Waters, CEO and co-founder of WiBotic Inc.; and Geeman Yip, CEO and founder of cloud services startup BitTitan, who we interviewed earlier this week.
Here’s a list of takeaways from the panel.
Know Your Goal
Spend some time examining your end goals. From Paul:
“When you’re starting a company, you want to make sure you know why you’re starting a company, and what your goal is. There’s a lot of different ways to raise money. You could do it through debt, you could do it through equity. Depending on what your goals are — if you’re trying to build a company to help your family be comfortable or trying to go for the next big tech IOP — that can determine which funding route you should take.”
Scarcity Makes You Smarter
One benefit of bootstrapping that all the panelists agreed on? A lack of money forces entrepreneurs to be smarter about how they invest what they have. From Sanjay:
“Scarcity of money really helps you be smarter about that scarcity source. This is based on experience with companies who have gotten copious amounts of funding. And the pattern is that not only do you wind up spending that money on cappuccino machines, you also end up over-hiring.”
Growth Solves Your Problems
As long as you can show a scalable amount of growth, you’ll win over venture capitalists. So use the trick Avni relied on and ask yourself if you can hit ten percent growth every week. It’s easy at first:
“Honestly, in the second week, that doesn’t sound like a lot. You’re adding one more person, one more booking. But that really does add up, and it looks nice and focused. So in probably about twelve or fifteen weeks, I had enough to go back to my angel connections here in the city and say, hey, I’m on to something here.”
Those hoping to catch the eye of today’s investors also need to show revenue alongside that growth, as Aseem explained, calling revenue the “north star” that business owners should rely on:
“Focus on revenue. The most important thing about building a startup is building something that’s valuable, and asking for revenue is how you actually figure out what’s valuable.”
Talk to 150 Customers
The first guy Ben talked to when attempting to land funding gave him an off-beat task to accomplish. Here’s what Ben had to say about it:
“Ha said, ‘talk to 150 customers and then come back and tell me what you learned.’ We spent a lot of time talking to customers, and we really learned who our target customer is and how to approach them. […] Without that, I don’t think we would have been able to raise that money.”
Be a Financial Engineer
Geeman’s exact strategy here might be tough to copy, but it offers insight into the sort of outside-the-box thinking that helps bootstrappers survive any way they can:
“Having money sitting there is not great, because you’re not making money. So one bit of financial engineering I did: It was during the real estate downturn, so we actually invested the money into real estate. We bought corporate housing, bought a townhouse, and invested in that.
[…] We made over a twenty percent return on all of our investments. We got out of the real estate business, because we need that working capital. But that money worked really well for us. You always have to think about how you’re going to financially engineer your situation.”
Find Your Center
“Funding is about momentum,” Avni said early on and she expounded on this later, explaining:
“If I think about myself this time last year, I was a wreck. Fundraising is an emotional and exhausting roller coaster, and I’m only removed from it now because we’re more comfortable in our funding state. The thing that took me through was the idea of returning to your center. Return to why you’re doing this. Don’t be fooled by the highs and lows.”
A great final takeaway from the chat? Make sure you keep track of your company metrics even when no one else is. “I remember when I had nothing and no VC wanted to talk to me,” Geeman said. Yet BitTitan was able to close it’s biggest round in one month, “because we had everything lined up from day one.”
Still Want More?
Check out the complete Facebook video of the panel and its follow-up Q&A session, from Tech.Co’s page.
Header Image: Wikimedia
This article is part of a Startup Week content series brought to you by CHASE for BUSINESS. Startup Week is celebration of entrepreneurs in cities around the globe.CHASE for BUSINESS is everything a business needs in one place, from expert advice to valuable products and services. Find business news, stories, insights and expert tips all in one place at Chase.com/forbusiness. Read the rest of our Startup Week series here.
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