4 takeaways on bootstrapping your business from Web Summit 2022
November 11, 2022
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Most startups aim to score a big round of venture capital funding and then focus on growing the company. In today's economic climate, startups are keenly aware of how much money they have and, most importantly, how much they lack. But for some, the option of having outside financing is not the best option or may not be an option at all. In such cases, bootstrapping, or self-financing through personal funds or initial sales, comes into action.
Tom Okman, Co-founder of Nord Security
Since the establishment of Nord Security and until this year, we have operated without external funding – and we have learned many lessons. Last week, I had the great honor of presenting our main takeaways from this bootstrapping journey on the stage of Web Summit. Here are the four main insights that I shared for founders focused on bootstrapping their business:
#1 Perfect your company’s mission
Your company's mission is not just a catchy slogan you place on your "About" page and then forget about it. Your mission is the underlying DNA of every meeting and every creative solution, and it works in the background every time your people decline offers from other companies.
When you raise funding, it's easy to lose sight of why you started your company in the first place. But when you are bootstrapping, your mission and your customers guide your business path. So bootstrapping founders, instead of focusing on raising the next round of funding, look for innovative ways to turn their mission into a reality. They are also more receptive to what customers are saying to them. That feedback naturally helps polish and evolve your mission over time, which in turn helps improve your corporate and product strategies. And it comes with a bonus – the company develops a solid internal culture.
#2 Build local, ship global
Some entrepreneurs are wary of using local talent pools, especially if the business is starting outside established startup hubs like Silicon Valley or Israel. However, that was not the case in our story. In fact, we were fortunate to start our company in Lithuania. While funding was scarce when we started, the local ecosystem, partners, and infrastructure helped us immensely in getting our business off the ground. People in Lithuania are talented and keen to prove themselves to their international peers. So one of our best decisions early in the business was to tap into that talent pool and support from local associations and policymakers.
Today, more than ever, talent and support for entrepreneurs are spread throughout Europe, both in traditional tech hubs and rising startup center’s. As a result, the startup world is getting flatter, so now is the best time to take advantage of building locally while shipping globally.
#3 Focus on the customer
Customers are royalty, especially when entrepreneurs operate without external funding. In such cases, customers become leading investors and the most sustainable source of financing, and startups must focus on them above all else. So to be successful, entrepreneurs have to build a product that their customers will love and want to pay for, meaning that creating a market fit for products becomes central to a startup's survival. Unfortunately, you don’t have a large treasure chest on your side when you are bootstrapped, so the key is to be efficient in adapting to your customer's feedback.
#4 Take risks and be nimble
The bootstrapping route empowers entrepreneurs to take charge of the big decisions when it comes to vision, hiring, operations, or finances. That gives self-funded startups an edge because they can be much more flexible, agile, and tenacious than other companies. But at the same time, not taking outside financing pushes entrepreneurs to be hungrier in finding ways to improve their business. Because knowing that customers are critical, you can't simply spend your way out of problems. In Nord Security's case, it usually meant taking risks and being the pioneer in educating the market and customers about a new use case, product feature, or upcoming challenges.
While such a situation might sound precarious, in a way, it also means returning to what makes startup culture great – the ability and willingness to be inventive and take risks. But it is essential to be decisive when things need to be fixed and be bold in pivoting because inertia can sometimes be more dangerous than recklessness. This combination can prove extremely potent if entrepreneurs allow themselves to be guided by their leading investors – the customers – and their mission-driven culture. But only if founders are willing to lean into it fully.