Bootstrap then Raise - with Besnik Vrellaku
May 22, 2024Nowadays, investors expect to see more proof and validation before they are willing to consider an investment. That means a lot of work has to go into your startup before you can even start pitching investors. You have to bootstrap first.
Besnik Vrellaku is a serial entrepreneur and investor. He is also the founder and CEO of SalesFlow, a sales engagement platform for multi-channel sales automation, which he bootstrapped and scaled to become one of the market leaders.
Besnik was our guest at the Meet.Capital Startup Podcast where he shared a thoughtful and honest account of his journey and learnings, including his thoughts about bootstrapping, and the right time to raise capital for a SaaS startup.
Here are Besnik’s 5 tips for startup founders:
1. Build Sweat Equity
In the beginning, owning 100% or 50% of nothing means exactly that - nothing. To raise money you need to show investors something tangible: an MVP, some growth, or initial traction. This isn't just typical advice; it’s crucial. Invest your own savings unless you're a student, in which case, seek grants or innovation from your faculty. If you lack experience, understand your circumstances and build your own sweat equity. You’ll need to prove real value before seeking investment.
2. Gain Experience
Before jumping into founding a startup, gain relevant experience. Many founders come from corporate backgrounds, but startups are a completely different journey. Ideally, work for a startup or be a domain expert in the problem you aim to solve. There's no better person to tackle a problem than someone who's experienced it firsthand. This experience is crucial because even with funding, making a startup successful requires hard work and intimate knowledge of the industry.
3. Experiment Widely
Avoid getting stuck on one experiment. Before identifying Facebook groups as a key traction channel, countless other methods were tested—Reddit, unconventional tactics, and more. Experiment like wildfire to find the channel that brings in your first customers. Use the data from these experiments to show investors how you plan to grow and scale. Proving that you can pull more customers from a successful channel is essential for securing investment.
4. Understand Unit Economics
Master your unit economics from top to bottom. Grasp pricing strategies, customer acquisition cost (CAC), retention, and churn - whether in SaaS or another field. Be prepared to explain to investors how you’ll make money and allocate resources effectively. Think like a fund manager, knowing where to invest to boost revenues. If you lack this knowledge, seek advisors or educate yourself, because without understanding these statistics, investors are likely to overlook you.
5. Cultivate Resilience
Resilience is non-negotiable. Bootstrapping businesses for years, and going through multiple MVPs without making a dime, requires a high level of perseverance. A deep love for your work is essential to make it succeed. Don’t give up after numerous rejections from investors; persistence is key. Use the right technology and data to find the right fit for investors and scale your efforts. Resilience and perseverance will ultimately increase your chances of success.