India has become an interesting place for startups, the Country promotes startups and helps innovaters and entrepreneurs start their business without any tedious regulations and requirements. This is the reason that there are new startups coming up every week. The recent mess about Stayzilla and the rumored sale of Snapdeal has brought to notice, the pain of scaling up too fast on the venture capital. Nevertheless, the country still has an appetite for venture funding. More than 90% founders are looking to raise funds in an unfavorable climate.
Most media coverage about startups showcase the fund raising activity instead of focusing on the business performance. The amount of funding has become a measure of success for most companies. Venture capital does not come easy, with every round of investment, you are answerable to your investor. It, thus, reduces any flexibility and makes you dependent on another individual. Every start up stumbles through blocks that come across its path and investors are prepared for a couple of pivots, but they begin to judge and reduces your credibility in no time. If anything goes wrong in your startup, you will focus on the expectations of the Board instead of the business or the product. With increasing investment, you lose your share in the startup and become a minority shareholder. Further, higher investment in a startup leads to higher spending.
In contrast, bootstrapping helps you build a sustainable company with the limited funds that you own. The survival of your company is directly related to the customer revenue, which means that you will be focusing on your products and services. In addition, the products must be covered without extensive marketing, with limited funds, you will consider every expense before approving it. You consistently need to improve your product or services until it works in the market. And since you are working out of your funds, you are not answerable to the investors, your business model can be sustainable and you can plan its expansion your way.
Without the investors, you have complete control over your business and you can decide how to scale your company. It has been noted that venture capitalists push start ups to grow and generate profits at any cost, but in a bootstrapped company, you can make decisions about the growth of the company without being answerable to anybody. With bootstrapping, you will also work hard for the company and hire the right talent. If you cannot afford the six digit salary offered at funded startups, you can definitely take the equity route. With the right talent, you will build a team that will help you build a sustainable business. The team will always look at efficient ways to solve problems and grow. If you have developed a bootstrapped company, you can raise funds in the future, but the same will be built on a strong position and a clear business model.
Bootstrapping is not suitable for everyone, it requires a lot of planning, cost cutting and building a team that works for the same. You will also have to take an off route that will help generate cash, but will be an uncertain path. Bootstrapping is risky and not spoken about. You will have to accept the fact that your company will not be covered by the media and individuals will not be dreaming of working in your company, you also will not be the most spoken about individual across the business magazines. But, you will break through at some point of time and then, your business will do the talking for you.