KISSPatent would like to welcome our latest partner Abdo Riani, of Upify.co. He wrote an excellent post for all entrepreneurs who want to successfully bootstrap their startup. We’ve included a few highlights below.
Let’s start off with a definition. What is startup bootstrapping?
Bootstrapping is about utilizing existing, self-generated and acquired resources to take an idea or company from one point to the other without referring to investors or banks.
You may be surprised to learn that 80% of all startups are bootstrapped, that is funded by the founder or family & friends. Only 20% receive outside funding from investors.
Yet among the ranks of successful companies include a number that were initially only funded by bootstrapping – and later by money from customers. Many such companies went years before receiving any outside funding. You might be surprised to see who’s included.
One example that you’ve all heard of is Braintree. Founded by Bryan Johnson, Braintree was bootstrapped for 4 years before receiving any outside funding. Two years after its first investment round, Braintree was acquired by PayPal for $800 million in cash.
How did Bryan do it? After two failed startups, Bryan needed a job – so he took a credit card processing job. Bryan quickly saw the flaws in the existing payment system model. He developed a better payment gateway and asked his 10 biggest customers at his current job if they would switch to his new system. Six of biggest customers agreed – and he was off!
Bryan financed his new gateway – including his first hires – through customer payments. One key lesson from Bryan? Consider a customer’s money as one round of financing.
Like what you’ve seen so far? Want to get more awesome tips on how to make bootstrapping your startup work for you? Then read more….
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