TechInAfrica — When establishing a startup, raising a round seems like the only way to grow a business. But let’s think again. Bootstrap your startup might the rightest way at the moment.
There are common reasons why some startups aggressively seeking out on investment rather than spending time to focus on daily improvement from the inside, including:
- gaining the financial and other operational resources they need to move forward;
- to increase their financial stability, focus in the short-term if they’ve been growing on revenue, founders’ savings and credit cards;
- to quickly accelerate their growth in order to capture a massive market.
However, looking for an investor is not always the right approach to funding a startup particularly at a venture’s earliest stages.
Agnieszka Wilk, an entrepreneur, believes in bootstrapping. Agnieszka believes that finding the right team and sharing common goals results in the best chance of building a successful business.
She built Decorilla, an online interior design platform that helps clients create curated 3D and VR spaces, on a simple Word document. With a very diverse skill set and strong common belief in not only the product but also the type of company they are building, Agnieszka and her team have been able to quickly launch Decorilla and make a profit.
According to Agnieszka and the Decorilla team, here are five reasons to stop focusing on fundraising only and to begin bootstrapping your startup:
It’s easier to keep your culture and values
You can’t buy culture or values, and when you have control of your company you can ensure that those things are built they want you to want, to last. Bootstrappers attract other bootstrappers and that creates a culture of people who are passionate, patient, and love running businesses they are proud of. They have the freedom to experiment without accountability to anyone else.
You’re forced to focus on cash flow
When bootstrapped entrepreneurs don’t have a false security cushion of investors’ money to fall back on, they need to prioritize making money themselves. Bootstrapping pressures entrepreneurs to perform; if they don’t reach their sales targets, the company will not grow. It doesn’t matter how many times you tell an entrepreneur to spend investor money as if it were their own, hard-earned cash, it rarely happens. Bootstrapped businesses are forced to count each dollar they bring in and put out, staying in complete control of their money and keeping their companies financially healthy.
You hold yourself accountable
Bootstrapping a startup has entrepreneurs focusing on metrics and milestones instead of focusing on getting sky-high valuations because they only have themselves to hold accountable. As Agnieszka says, although having a high valuation doesn’t sound like the worst thing for a startup (it is a bit of an ego boost after-all), it could seriously harm a company. A down round of funding after poor spending choices made with initial investment rounds will not turn out well for the entrepreneur.
You’re in control for the long-run
Entrepreneurs who bootstrap their startups know their startups inside out, and know they are able to sustain themselves without outside financial help. This leads to confident decision-making so they understand their company’s best interests better than anyone when it comes to seeking outside funding or other resources (expertise, introductions, skills or the next CEO) a company needs.
You increase your leverage for future fundraising
Bootstrapped businesses start small and generate value at a manageable pace to become profitable. So, when a company does reach a tipping point that it makes sense to approach investors to get a financial push, the investment is pretty attractive. There’s proof that the market need is there, the business model works and the founding team is the right team to take the opportunity forward.