Customers before Capital
Raising money is over-emphasised in today’s startup world. The most successful startups seem to be the ones who’re best at raising money. For starting entrepreneurs it feels the logical step to take, but it’s not.
At Prezly, we’ve put our customers before capital. Not because we’re against raising capital, but because our customers are just more important. Customers are the only ones that will decide whether or not we’ve built a viable business. Focussing on our customers, prospects and product got us to profitability quickly.
The main argument against bootstrapping is that it will slow you down. Which is partly true. We can’t hire 5 devs at once or set up a global sales team within 6 months. But what if moving slower actually leads to sustainable growth?
Funding impacts churn
I wasn’t surprised when I saw these numbers in a study on SaaS churn. Bootstrapped companies have lower churn metrics than funded companies. Growth is slower, but more sustainable.
Raising Money = Time sink
To be honest, I have no experience raising capital, but I can only assume it takes a lot of time. Time that you aren’t spending on your product, your customers, or growing your team. For me it’s crazy to see founders closing a round just to start working on the next one.
Dependence on the financial system
Becoming venture funded means relinquishing control over the fate of your company. You’re dependent on a system that is out of your control. There are countless startups that were doing great, but failed because they didn’t manage to raise more money than their competitors, or because the financial market went through a rough patch.
Focus on team and culture
Hiring new team members as well as nurturing our company culture is one of my prime tasks as a founder. Getting this right in your first hires is even more crucial. Being tasked to hire a lot people at once will ultimately force you into making mistakes. Team culture is a very fragile thing in the early days, you can’t drop the ball here.
It’s a daunting job to start something out of nothing, without any money. But remember that it’s not a sprint you’re running. It’s a marathon. Our guiding rule throughout the kilometres was to keep our customers in mind and at heart. By providing them with the value they needed, they became our prime and sole company investors. It seems almost too simple to work. But remember this: outside this tech startup bubble of ours, almost all business start like that. With a passion, an idea, and a decade of smart people working hard.