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MenuPro's & Con's of raising out of boostrap for a $1m+ ARR company that grew 300% last year
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I would bootstrap as long as possible.
As long as you're able to engage engineering resources for continual product enhancement; the customer support team to ensure customers are churn-proof happy; the marketing team to generate awareness, leads, and optimize the sales process; and the sales team to close business, keep going on your path.
Where things get tricky is in terms of competition. If you're bootstrapped, it's harder to compete against a well-funded adversary (or adversaries) because they can do much more in terms of generating awareness. Their marketing team can attend many conferences. If your sales cycle is aided by in-person contact, conference and trade shows could be important. They are not cheap.
Your marketing needs may also require a huge amount of demand generation. This can become really costly. (See the Fan Duel sports betting marketing campaign in Q3/4 2015. Mega expensive!).
Depending on your product category, investment can also play a role in how prospective customers perceive you. If you're selling to the enterprise, having Blue Chip backing from Kleiner Perkins or Sequoia will impress those who look for this external validation. (You've surely heard of the “No one ever got fired for buying IBM” statement?). VC funding also helps with publicity, and media coverage if you care about that and need TechCrunch clips.
There are many successful startups that never took any money. The vast majority or startups, in fact, don't.
Based on your description above, though, it doesn't seem as if my thoughts apply to you. If you already have partnerships that are working for you, global customers you can leverage in those regions, a product that is clearly providing value to your customers, and you can fund growth from cash flow or other options (debt financing, perhaps), I'd keep to your path. The larger and more successful you become, the better the terms you can negotiate if and when you decide you can't live without outside investment.
Early on, I often thought the same thing - once you're ready to invest, I won't need you. In hindsight, I think that's a narrow view.
You have to look at it from their perspective. Investors aren't looking to put money into an exploration project. They are interested in putting money into a business that will use it to grow more quickly than they otherwise could have. If you grew 300% last year, could you have achieved 500% with additional capital, a more robust marketing campaign or through adding employees?
Also, just because a concept works well at a small stage, doesn't mean it will be successful as it scales up. Growth slows, customer acquisition becomes harder and a company's culture changes. Those are all risk factors for investors. Bootstrapping is great, but you should consider bringing on investors if they can provide capital as well as guidance, connections to clients or other valuable intangibles that will take your company to the $10M+ mark.
Bootstrap. Read "How To Get Rich" by Felix Dennis. Or better yet just remember the camel's nose in the tent story.
Listen, in any business you have to take some chances and some risks. Make sure you don't need a license and go for it. Remember, timid business people have skinny kids. Paraphrased from Zig Ziglar.
I am not trying to sell you on calling me. Really, I am pretty busy with my businesses and consulting. However, I need more info before I could have a greater impact in helping you.
Ask, Ask, Ask, then Ask again.
Bonus:
Here is $10,000 worth of information for free and in a nutshell.
Concentrate on the 3 M's. There are actually 7, but 3 will do for now. These are Market, Message, and Media. They come in that order.
Who is your target market (customer, clients, buyers, users, etc.)?
Tailor your laser focused message for this target market.
What is the best media mix to get your message to that market?
Here's what you do...first, make it an offer that is so incredible that they cannot resist. Secondly, do all the work for them. Make it so easy to make the purchase now that they can do it virtually without effort. Thirdly, give them an incentive to act right now. Fourthly, offer an almost unbelievable guarantee. Fifth, offer a bonus for acting now. There are many other incredible steps, but these steps should help the novice to the professional sell anything.
Whether you are selling B2B or B2C, you have to focus on selling to only one person. You can actually sell to one person at a time while selling to millions at a time. They are one and the same. Don't get off track, what we call digital marketing selling is just selling in print. And that has not changed since Cluade Hopkins wrote "Scientific Advertising." Really long before he wrote the book.
The secret to success: I have had the pleasure of knowing and working with some of the biggest names in business, celebrities, actors, entrepreneurs, business people, and companies from startup to billion dollar operations. The number one reason for their success is doing what they know and love while doing it in new, creative, and innovative ways.
Ask, Ask, Ask. Have thick skin and learn from each "mistake." In a short while, the market will tell you what you need to do and who and what you need to ask. But get started now even if that just means asking a contact on LinkedIn.
While you are thinking, think big and think of something at least 1% better, newer, or different. And being cheaper is not a winning strategy.
Make decisions quickly and change decisions slowly..unless you are actually going off a cliff.
Remember these two 11 letter words...persistence and consistency. They are two of the most important tools ever invented.
Treat everybody you talk to and everybody you meet (including yourself) like each is your number one million dollar customer.
Best of luck,
Take massive action and never give up.
Michael
Michael Irvin, MBA, RN
It sounds like you don't need money, but you need connections.
VCs are valuable as such, because they can provide intros to Woolworths CEO etc.,which saves you 3 months in your sales cycle.
At your point of traction now, you can get a really good deal for your round, so it is definitely worth it. However, I would also hop over to the U.S., to speak with some investors there, it's definitely worth it.
I'm not sure if you know the Aussie Mafia, but simply search for the Facebook group and make a post there, they will connect you to relevant investors.
Related Questions
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When raising money how much of equity do you give up to keep control? Is it more important to control the board or majority of shares?
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What roles should the CEO and CTO have in a VC meeting?
The more important first impressions to leave a VC with are: 1) That you both are credible and inspire confidence that you can execute the plan you're fundraising on. 2) That there is good chemistry and a great relationship between the two of you; 3) That you can adequately address the concerns/objections/questions the VC raises. The CEO is expected to do most of the talking because the CEO should be the best person in the company at articulating the vision and value of the product and company you're building. If your CTO is comfortable presenting part of the pitch, it would be ideal for the CTO to speak to the product slides. The most important thing is for the CTO not to be a "bump on the log" meaning that you don't want them sitting there for most of the presentation with nothing to say. If you feel that's the case, you really shouldn't bring your CTO. Most VC meetings will not get technical and under the hood. Each question answered should be answered by the person best qualified to speak to that question. You should make eye-contact with your partner and use subtle body language to find a way to cue the other person to speak to that question or simply offer "CTO, would you like to answer that?" Bottom line, make sure that the CTO can speak confidently enough about the product and vision, otherwise -unless specifically asked by the VC - come alone. Fundraising is a big distraction to building and a good VC will always respect that in a first meeting, the CTO can be excused from attending in priority of building product. Happy to talk to you both on a call about helping get you feeling a bit more confident and prepared before your meeting. I was formerly a VC associate for a $500m fund and have raised money from VCs as a serial entrepreneur.TW
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Where can I find programmers willing to join a growing mobile start up for equity only?
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What would be a good answer for describing the size of your company to a potential prospect who might consider you too small to service their account?
What an awesome question! Businesses are running into this issue more frequently that ever, good news is, it can be done. Having worked on projects with oDesk, Fox Television and Wikipedia and having a very very small staff, it's certainly possible. Here's how I say it in our pitches to larger organizations: "Tractive West provides tailored video production services to organizations of all sizes. We have developed a distributed workflow using the latest digital tools. We leverage our small creative and management team with a world wide network of creative professionals, that means we can rapidly scale to meet the demands of any project while keeping our infrastructure and overhead lightweight and sustainable." Cheers and best of luck.SM
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Does anyone know of a good SaaS financial projection template for excel/apple numbers?
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