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  Ed, 2 Feb 2001 @ 11:55am

  
  

  Other Reasons

  A graph in the San Jose Mercury News shows that VC funding went way down in the last quarter, especially first round funding. Paradoxically, I think that difficulty in obtaining VC funding will turn out to be a good thing. It seems that all of the wildly successful and really rich entrepreneuers turned out that way because they couldn't get funded, which has two benefits: first, it forces you to figure out how you're actually going to make money (i.e. you need a real business model) and second, the original entrepreneuer ends up with a much larger slice of the pie the longer he can wait until opening the company up to outside investors.

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    Phillip, 2 Feb 2001 @ 12:12pm

    
    

    Bootstrapping

    Indeed. When I was starting my company (just over 7 months ago) I was offered financing from investors. I could have had a plush office in Soho, given jobs to all my friends, etc. Instead I gave up my flat and moved in with my parents, turned one of the rooms into an office filled with much equipment donated by friends, begged and borrowed finance from family and friends. I've signed my first client which covers my co-location costs for a year. Around 4 more customers will pay for my $10k Dell server. Then each sale will rapidly mount up to the money I would have earned employed and then ever upwards!
    Different people have different management styles, and for me organic growth and retaining 100% of my company suits me.
    Phillip.

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      Mike (profile), 2 Feb 2001 @ 12:32pm

      
      

      Re: Bootstrapping

      I agree. I think people who can bootstrap their companies tend to make more solid companies in the long run. There are, however, some situations where a company really does need capital investment in order to get going... Unfortunately in the last few years people just figured that *any* company needed venture capital, and that's just not true. Bootstrapping is an excellent way to build a company - and if you need capital investments later on you're in a much stronger position.

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      Russell Miller, 2 Feb 2001 @ 3:00pm

      
      

      Re: Bootstrapping

      Any advice on how to successfully bootstrap?

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        Mike (profile), 2 Feb 2001 @ 4:10pm

        
        

        Re: Bootstrapping

        Actually... what I've seen happen more and more is that people start businesses by adding a "consulting" element to what they do. If you're starting a business you tend to have some sort of expertise in the area you're working on. So, I keep seeing companies that start with a plan for a tech product (hardware/software) that helps them do something... but instead of building it for sale at first they either just consult in that area of expertise, or they build a cheapo version which just they can use to help with the consulting. Then they funnel the cash (ooh! cash!) back into the development of the actual product. I've heard of at least 4 or 5 companies that bootstrapped themselves this way.

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          Ryan, 4 Feb 2001 @ 11:22am

          
          

          Re: Bootstrapping

          And of course there are several start-ups that start as consultancies but with the aim of developing a product (I know of about a few of those both in London and in the US).

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        aurum mukhacwa, 28 May 2004 @ 3:00am

        
        

        Re: Bootstrapping

        I'm currently doing my Electrical (h/c)national diploma at TWR. I did it at the college level and I've got N6 certificate. I was thinking of starting a wiring company. Can you please tell me how can I go about it.

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