Why is your startup boot better than VC

In the current climate of fundraising – versus background Tech market slowdown – The global investment community is looking to protect itself. There’s more pressure on investments and founders, as investors chase achievements β€” fast.

But turning to venture capital funds isn’t the only option for European founders when they’re looking at an early stage of growth – taking off your startup offers a viable alternative without the many downsides of working with venture investors. Bootstrapping is the process of just getting started with savings (and sometimes money borrowed/invested from family and friends) and income that you make yourself, and it can put you in a good position for future growth.

Now is the time to boot as you are less committed to broader market trends and pressures, and instead leverage your trusted instant network for support and backing; all of which It can get your company moving from the start.

What do you get from your startup?

Bootstrapping is not an option for every startup. You should have access to some capital, whether it’s your own or via family or friends, and have a flexible enough network to help you through those early days. At Planta, we have been able to operate as a tight unit and make decisions quickly, with the support of an experienced founding team.

To successfully take off your startup, you also need to be prepared for awkward conversations, such as the first time outside investors reach out to you.

So how do you know if Bootstrapping is right for you? As an early stage startup, you should focus more on the best way to move forward with your business beyond the next 12 months. You have to ask yourself:

  • How do we want to work?
  • What is the best way to work for our business?
  • What is our revenue strategy?
  • What does the market look like?

Using Planta as an example, we want to build the best product possible, and to achieve this, we dedicate maximum resources to support this goal. We believe the best course of action is to create flexibility and control. This means quick decision making with complete control over the process. This also means having a smaller team, fewer projects, fewer internal meetings and no reporting, as well as eliminating all potential “time thieves” that might get in the way of the team’s focus on building the best possible product for our users.

Planta launched in 2018 and funded its first year with founders’ savings β€” it finished 2019 in profit. This was both a goal and a necessity to continue booting, so a clear revenue strategy was critical. The first year was doable thanks to the founders’ ability to create the product themselves, through the startup’s development, coding and design. Only 12 months after launch, we could afford to hire our first outside employee, our in-house factory expert.

πŸ‘‰ Read: Beginner’s guide to boot

In practice, bootstrap requires patience, prioritization, and an understanding that “coercive situations” can often lead to creative breakthroughs – Take decisive action when facing challenges. Speaking of anecdotal evidence, we can grow with a small team, a smaller budget, because it is much easier to manage the team and integrate them into our mission.

Can you run more projects at the same time with more people? yes. But that also creates more internal meetings and roadmap discussions (more ‘time thieves’), and as more people participate, it’s harder to focus on the core product and real value to our users.

Even if you’re following the boot process, it’s important to always listen when potential investors take an approach, as long as it sounds serious. Be careful though. We’ve had meetings with potential investors where they have said, without excuse, that they have never used the product, and have never actually downloaded or interacted with the app. This is a giant red flag, and a clear sign that they don’t care about our users’ interests.

But just as much a third party may offer quality advice that can lead to a breakout, or provide you with some grounding as you go through a period of growth. In our case, it’s not always about booting up, it’s about the best way forward for the company right now and in the near future. This keeps all options open, and investors accept that.

The negatives of venture capital vs. the positive aspects of the takeoff process

Bootstrapping has been fundamental to our growth. We made a profit two years after launch and recently expanded into Japan and South Korea, as well as operating in North America and Europe. Bootstrapping made this possible in several ways. we had:

  • Fewer internal bureaucratic obstacles;
  • absolute accountability;
  • optimal decision-making policies;
  • streamlined workflow;
  • Ability to pause or speed up projects based on strategic objectives or developments.

I know from the tech community that sometimes an investor might have an item listed that requires their advice on strategy, or a seat on the board that carries some checks and balances. Imagine the frustration of figuring out the right next move, but waiting several days for the final admiration to hit the top and the possibility of losing ground. Bootstrapping removes this hurdle – allowing the team to execute and move quickly.

Speaking to other people in the ecosystem, we’ve been told – over and over again – that they’ve been missing out on freedom and efficient workflow since their boot-packed days. How much time do early stage companies spend preparing for investor meetings? This can be considered a massive drain on limited resources.

in Planta, Key decisions β€” like when to launch into a new market, when to invest in different marketing initiatives, where and when to start a new project or just re-adjust your roadmap β€” talk on Slack, between a few of us, and we make a quick decision.

πŸ‘‰ Read: Bootstrapping vs VC: Choosing the Best Way to Fund Your Startup

I know a startup that recently accepted their first overseas investment, and the first activity after the investment was a partnership with a brand from the investor network. The founders felt that it was absolutely not connected to their product, its users, or their vision. He was very focused on PR, which of course could be important, but he took time away from other major projects, which were eventually paused. Crucially, it caused the first rift between the founders, the broader company, and the new board, and team morale was affected. To me, this is a case of short-term “wins” that take precedence over core company values ​​and the importance of teamwork.

We recently paused work on a revenue plan to focus on Application performance project. It is almost certain that outside investors will tell us to continue with the revenue plan and come to a decision with The outside parties required several hours of meetings, analysis and preparations.

Did we make the right decision? It is too early to tell. But we saved a great deal of time, energy and resources and made the decision ourselves – we are 100% responsible for the outcome. All of these things give us energy, and although these values ​​and feelings are hard to define, they give us a boost every week.

Other Alternative Financing Options

However, I would like to stress that external capital can be really beneficial. The European tech community would be much smaller and less empowered were it not for the investment community, and I urge startups to consider all available options when exploring the acceptance of outside capital.

As the ecosystem constantly evolves, more accessible financing solutions will become available – despite the current technological slowdown, startups have multiple options when it comes to fueling growth. In the past 12 months, passive investment and Revenue based financing Made great strides, for example.

In the end, no two startups are the same, and as such, never limit yourself to the path your peers have taken, as it may not be the right choice for you.

In our case, we like flexibility in How we work, how we build our organization and the decision-making process. Bootstrapping delivers on all of these fronts, and it’s not as daunting as it might sound – accountability can help propel you forward.

Jesper Svensson is CEO of Planta.