BY
There is no foolproof formula when starting a business. The entire process of creating a product, service or company can be as personal as a work of art.
However, just like in the art world, postures, intellectual exercises and techniques exist that function as instruments that allow the artist to materialize his work on canvas.
I know this, because first and foremost, I am an entrepreneur, also, painting is one of my favorite past times. Inevitably, I find parallels between the two activities all of the time.
I have read various articles and listened to some speakers who refer to investment as the cornerstone of validation. In reality, the validation is made by the market, not by the investors.
Funding a startup is not a one-way road. Situations vary and the time to look for funding is different for each company.
However, in my experience, at an early stage, it is always better that the entrepreneurial team use their own resources for as long as possible.
The first phase, founders know, will test your motivation and will teach you various lessons.
In the startup world, we know that bootstrappingmeans utilizing the financial resources and available talent on the entrepreneurial team to the maximum.
Bootstrappingis the ability to effectively execute the company and carry out its business plan, with or without securing outside capital.
There are several very successful companies that exemplify the ability to maximize resources, such as Github, Qualtrics, Woothemes and Tableau. In Argentina, to name a few examples, there are companies like Digital Ventures, 123Seguros and RedInnova.
The managerial ability of entrepreneurial teams speaks for itself. They are so successful that part of their work includes rejecting offers from eager investors who want to be part of the company. The advantages of continuing to operate through bootstrapping are several:
- The entrepreneurial team is obliged to maintain a policy of austerity.
- The startup will be more creative than those with a funding cushion. A lot of money early can kill the thirst for growth and the necessary drive needed to compete.
- Feet on the ground. For many startups, raising a round of funding is a cause for celebration. It is encouraging to know that someone thinks enough of an idea that they bet money on it. However, this does not mean that a startup is a large company or investors behind the company are on track to technology stardom.
Either way, it is necessary to understand the timing of finding resources. Dismissing the search for a risk investment and delaying growth (scalability) simply because your partners’ ideas give you hives, is not thinking big.
Undoubtedly, the time to seek funding comes when the product has successfully launched and has made a significant impact on the market.
That is the time when capital will make a big difference in acquiring resources and making the necessary investments to go faster.
The best investment is placed in companies which the investor knows will not need the capital and in which the startup itself knows why it is raising money. Additionally, that the company grasps landing actions and elements required in order to grow important metrics and make use of the money to accelerate the growth to which it was assigned.