How can I go about bootstrapping my new start-up?
This week’s Secret Soloist is answered by Event Arc founder Scott Handsaker.
Maybe raising a small round is considered "bootstrappy" in LA, but for most mere mortals, bootstrapping is when you build your business without raising external capital, relying instead on internal cashflow.
Bootstrapping doesn't prevent you from raising funds in the future, but it is certainly how the vast majority of web start-ups get going.
Didier Elzinga has bootstrapped CultureAmp for the last year, building a functioning prototype and gaining customer traction before raising external capital.
CultureAmp is building a lightweight, integrated solution to help fast-growing companies manage their culture through performance reviews and coaching.
According to Elzinga, running a start-up without external capital helps to determine if you are really cut out for the life of a bootstrapped entrepreneur.
"Bootstrapping helps you understand if you really want to do a start-up. I think it helps to bleed a bit for an idea," says Elzinga.
"You have your house on the line and you haven't slept more than five or six hours in a night for the last six months. You're forcing yourself to learn in two weeks what other people have spent years learning, and yet you still get up for more.”
“Do that, and you have earned the right to go and follow your dream."
It is possible to bootstrap a business while still holding down a full-time job, and that is exactly what Mark Mansour from Agile Bench has done.
Agile Bench provides an online project management system for agile development teams.
"We are self-funded, with all team members at Agile Bench working other jobs. We seeded the company with some cash and our time, using revenue from our customers and the occasional cash injection to keep us going," says Mansour.
"Being bootstrapped helps you prioritise what needs to be done first. Having multiple masters (jobs) is demanding, but we know that everyone involved is dedicated to seeing Agile Bench become the best online project management tool."
Even though building a start-up while working full-time elsewhere is demanding, Mansour remains positive it can be a good solution for the right individual.
"(Business author) Dan Pink talks about the things that motivate us – autonomy, mastery and purpose,” he says.
“When you have your own business you definitely have autonomy, you should have purpose, and you are going to need to master lots of things too. It is the perfect vehicle for a motivated individual. Just start. You'll work out the rest as you go".