(11 votes, average: 4.18 out of 5)
Loading ...My new Forbes column Bootstrap Yourself highlights Silicon Valley’s hottest new trend, Bootstrapping. Indian entrepreneurs, you need to embrace this trend, given that the early stage venture capital industry doesn’t quite have its act together yet.
Great bootstrapping case studies I have covered are Sridhar Vembu, Frank Levinson and Jerry Rawls, Cree Lawson, and Beatrice Tarka. Sridhar, Frank and Jerry did it almost without any outside money, while Cree and Beatrice have done it with very small rounds of Angel funding. Aspiring entrepreneurs, you have much to learn from them.
Also note, in Frank and Jerry’s case, they used services to bootstrap, while Sridhar used a lower profile, but successful product which became a cashcow.
BootStrapping is as old as business itself, Its just that the new economy coined a word for it. If you look at any proprietary organization it was definitely bootstrapped, even way back in 18th century. And as for entrepreneurs in India the situation is no different from that in the US. As somebody pointed out, Paul Graham’s articles hold good everywhere.
BTW I am a resident Indian who has a bootstrapped a tech startup, and I’ve worked for enough years around the world, I barely notice a difference in building a startup. VC funding is meant for a purpose and bootstrapping should not be confused with it.
I also beg to differ that VC funded companies are somehow “better” than bootstrapped ones because VCs invest in ideas that can become “large” and get companies running “fast”.
This is quite misleading and is spread mostly by VCs so its also self-serving.
Note
1. Even VCs agree that 9 out 10 investments do not scale up. They only make big money from the 1 that becomes big.
2. Often the one that becomes big is more a result of the power of innovation than the capital as such. Example: Google. If Google had raised even 1/20th of what it raised, it would have still become equally great soon enough. The power of the idea.
3. There are many VC funded companies who did not scale up even 20% per year in revenues post say 4 yrs of VC funding. Example, mobile VAS companies in India and hundreds of dot coms in the 99-00 period.
Sramana, Thanks for posting your take and examples of bootstrappers. However I am appalled that you are claiming to have found a new trend!! Bootstrapping is as old as capitalism itself. If you leave aside “Red Herring” and pick up “Inc” magazine, you’ll see plenty of bootstrappers since ages. Prof. Bhide of Columbia has done comparative research of such bootstrapping entrepreneurs and VC funded entrepreneurs.
Considering the distractions most VCs create for their portfolio companies and the rights they want, boostrapping is welcome.
In India often there’s little appetite from even well to do entrepreneurs to self fund their companies. People often want to raise even modest amounts not from self or family but from angels.
Sramana,
Now when you are talking about your 3 jobs, how many of these full length articles do you write yourself? And how many are outsourced to “cheap” writers in India? Any stats?
Vijay,
I just gave some pointers here, and did not even intend to write a full-fledged article. I am already doing 3 full-time jobs: consulting, my blog, and the Forbes column. I just don’t have the time to write another guest column set. However, I have a huge commitment towards sharing whatever little I have learned with entrepreneurs all over the world, and especially the Indian entrepreneurs, which is why I try to keep a finger on the VentureWoods community. Please understand, that I will NOT be writing long articles on VentureWoods. But, I will continue to give you pointers, in case that stirs your imaginations, and helps you in learning a few tricks of this game.
Sorry about being annoyed earlier.
Sramana
Sramana,
I think you got this in the wrong spirit. You are still one of the folks that I do follow, and despite time-strapped make the time to read what you have to say. I have seen better, and much better articles from you. This one was simply a bit lacking in context, and I think everyone is mentioning the same.
Perhaps my expectations are set differently from your other articles and insights you provide.
Anywho, shall step back and let you do your thing.
Vijay,
I don’t have time to bicker with you. There are enough people who appreciate the work I have been doing to produce the content I do.
If you don’t, I can really live without you as a reader. If you want
to insult me, do so, but I don’t think the few hundred readers of Venturewood who find my inputs useful necessary appreciate it. And I certainly don’t.
Alok - please let me know if you prefer that I don’t engage with your community. I really am extremely time-strapped to put up with this kind of crap.
Sramana
I whole heartedly agree. Early stage funding is really difficult in India and to my surprise I find that most VCs don’t share the excitement of entrepreneurs in new ideas
Prior credibility of an entrepreneur is also a crucial attribute investors seek and it is difficult for the 20-something folks to manage that.
“since you guys in India don’t have as much access to early stage capital, all I am trying to point you to are options.” I’d go with Krish on this. Who said this was the case for us folks here in India. Seriously!
Paul Graham has written a recent article [http://www.paulgraham.com/googles.html] where he is wailing and moaning on the same topic. And I think he lives in the heart of where the action lies.
To Quote Paul from his Article, “I used to think of VCs as piratical: bold but unscrupulous. On closer acquaintance they turn out to be more like bureaucrats. They’re more upstanding than I used to think (the good ones, at least), but less bold. Maybe the VC industry has changed. Maybe they used to be bolder. But I suspect it’s the startup world that has changed, not them. The low cost of starting a startup means the average good bet is a riskier one, but most existing VC firms still operate as if they were investing in hardware startups in 1985.”
Another irrelevant article which has no roots of context.
Sramana,
I was referring to Mr Vembu’s answer (see Page 7 of your post)- he is not talking about his first company :
“Our OEM and Manage Engine businesses generate enough cash to allow us to bootstrap the Zoho piece.”
IMHO, if this is bootstrapping - then Microsoft bootstrapped Vista with cash from XP and Office.
/// The difference between a VC idea and a small idea is that VCs only fund businesses that can become relatively large. What I am pointing you to is that you can bootstrap a smaller business and make it into a cash cow, that can then fund bigger ideas. ///
Good point.
I really do enjoy your articles, in case that is lost in the noise. I also agree with Deepak about the formatting on your blog, but the content is often worth more then seven clicks !