#27- I 🧡 bootstrapped founders!
Why I love working with bootstrapped entrepreneurs!
What is bootstrapping?
Bootstrapping is a term used in business that refers to the process of using only existing resources like personal savings, personal equipment, and other resources to start and grow a company.
Talk to anyone who has started with a shoestring budget, they will be adept at working with a limited bandwidth and resources. Simply put, bootstrapping means the company operations mandate them to grow using highly effective and inexpensive ways towards positive cash flows.
I am a firm believer in working with bootstrapped entrepreneurs. Additionally, as a part of our mandate at Malpani Ventures, we prefer working with entrepreneurs who embody the 'frugal' mindset. After all, we want to fund frugal innovation in India. And there lies our love, and respect for bootstrapped entrepreneurs!
Constraints breed Creativity
Since bootstrapped ventures do not have access to outside capital, they are forced to become hyper-efficient. Founders are forced to develop scrappy instincts and a 'can-do' attitude irrespective of the task or problem in front of them.
How?
People
Bootstrapping is actually also a fantastic way of finding the right people. We understand the allure of working at a well-funded startup - generous salary, ESOPs actually have a value ascribed to them, relative job security, and an assumption of growth. However, one needs madly passionate people to work with, when the 'office' is just a spare bedroom where the CEO and intern share a table, with bring-your-own-devices, and perks mean chai made by the same founder's parent. A bootstrapped founder might not attract the best talent but will surely work with a bunch of like-minded people who believe in them.
Efficiency
Not having enough cash in the bank creates a strong sense of urgency and efficiency. Bootstrapped companies tend to get their MVP to the market faster, develop product updates quicker, and move towards monetization sooner. This improves the fundamentals of the business leading it towards a sustainability.
At Malpani Ventures, we want to provide capital for businesses that have a fair degree of product-market fit and a minimum base-line revenue that showcases their ability to build a business model. In turn, we support such ventures with unwavering support and provide capital to really scale up from that base. Our capital is strictly for scaling, and not for concept-stage or prototyping.
Accountability
We have found that the founders of bootstrapped companies have a stronger sense of accountability. After all without external capital stakeholders, they become the de-facto judge and executioner. Good, bad, or ugly - they have to make all the decisions themselves. Having said that, we do not want to discount the importance of having experienced investors on board. But the sense of accountability knowing there is nobody else to show you the mirror, makes entrepreneurs wear multiple hats, keep a finger on the pulse, and develop a willingness to roll up their sleeves.
Measure what Matters
There is no room for vanity metrics and showboating in a bootstrapped company. Every single metric matters. Founders develop a newfound sense of clarity to go from planning to execution to outcome to (more) cash in bank. After all, that more cash is the difference between a going concern and a bankrupt venture. Not having an external investor ask you about your MIS reports, and cash positions puts the onus completely on the founder to be aware of where they stand in the business. Do they have a sufficient runway? Do they need to start approaching inactive users again? Do they need to reduce their burn? A bootstrapped founder is the CEO, CFO, CMO, CTO, and Board Member all-in-one.
There are so many more lessons to learn from bootstrapped companies. In a way, every company I evaluate, and eventually fund - makes me more aware of efficiency, productivity, and innovation.
I am always on the lookout for exciting companies to work with. If your company fits our investment thesis, please send me a hi!