Bootstrapping is the emerging mantra for entrepreneurs these days. Is it a new alternative to funding? Read on to find out more
Frugality is one of the most beautiful and joyful words in the English language, and yet one that we are culturally cut off from understanding and enjoying. The
consumption society has made us feel that happiness lies in having things, and has failed to teach us the happiness of not having things.
Elise Boulding
Let's look at the Oxford definition of a bootstrapper:
Bootstrap definition
A situation in which an entrepreneur starts a company with little capital. An individual is said to be bootstrapping when he or she attempts to found and build a company from personal finances or from the operating revenues of the new company.
Investopedia Commentary
Compared to using venture capital, bootstrapping can be beneficial as the entrepreneur is able to maintain control over all decisions. On the downside, however, this form of financing may place unnecessary financial risk on the entrepreneur. Furthermore, bootstrapping may not provide enough investment for the company to become successful at a reasonable rate.
I have written in the past in this column that entrepreneurs apart from their ideas, passion, and luck, need capital; incubation capital. The new entrepreneurs are bootstrapped.
In fact, I would meet more budding entrepreneurs looking for capital than looking at mentoring, linkages and advice two years back.
Since the last two years, the scenario has changed; these days I meet more entrepreneurs "who are incubating themselves," isn't that good? Doesn't it show the confidence they have in themselves? As my first Australian boss David Fowler would say "money talks, bullshit walks." The budding entrepreneur is putting his or her money where his mouth is rather where his or her conviction is.
Let me give you three recent examples of three varied bootstrappers I encountered , or rather had the good fortune to interact with them, recently.
I met Jatin Mahindra who is now incubating multiple related ventures second time around. Jatin is a serial entrepreneur. I like him because he has a similar background as me, has high integrity and never gives up. Jatin has also learnt from his past not-so-successful ventures and has polished his execution game. Recently he shared all his ventures that are coming up and when I asked who is funding them he said, "I am a bootstrapper. I am doing it with my own money. I am trying to do it with my resources and stretch my money." Jatin believes he can make it happen with his own money and what he needs is mentoring and once his ventures progress, he will get better valuations. Sounds logical to me. Jatin says to me "once I have built it to a level, I will go to an investor." I said to myself that's logical, makes sense.
Let me share another case of a first time entrepreneur and bootstrapper Ajay Chaturvedi of HarVa, introduced to me by my longtime friend Sunil Sapra of Astaro (another first generation entrepreneur).
HarVa means "green" for the villages. HarVa means Harnessing Value for Rural. Ajay's vision for HarVa: To create economic and social value for business and clients by leveraging labor arbitrage and tapping the value of employing rural youth, while ensuring industry quality and delivery standards.
Ajay shared his passion of creating rural BPOs and tapping into the growing rural economy and changing the lives of the rural community and building a business along the way. Ajay's passion came through and no wonder he found his calling in HarVa to quit his blue chip Citi job and a promising international career that a Wharton graduate could hope to have. I asked the same question to Ajay about the source of funding for HarVa, he said "I am doing it with my own money and I will make it work." I loved it as it came with the deep conviction that what he was doing was value-able and he will demonstrate it. It was like someone telling me "I will be my own Godfather."
The third bootstrapper is a lady, Mita Patnaik, that my friend Rajesh Lalwani (a first generation social media expert and entrepreneur) introduced. Mita left a career in US in consulting to start a business-to-business e-commerce business in the ethical goods domain called Vianza. In Mita's own description, Vianza is a community driven B2B transactional marketplace simplifying sourcing, selling and co-creation of sustainable consumer goods. Vianza lowers barriers to international trade, brings transparency and delivers savings in cost and time, along with lowered risks. I asked Mita how she was funding her own venture and she said she was doing it with her savings and the money she earned. Here she was, Mita, another bootstraper.
All three Jatin, Ajay and Mita were doing it with modest resources and with their own money.
I asked myself, why these entrepreneurs, who easily could have got monies from angel investors, chose to do it themselves? Why have they chosen to be bootstrappers? The answer is simple, they want to prove the concept, want to make it happen come what may, they want better valuations, and they want their "skin in the game." That's what will make their ventures valuable in the long run.
Let me end by saying what two wise oracles said:
Be content with what you have, rejoice in the way things are. When you realize there is nothing lacking, the whole world belongs to you. ~Lao Tzu
We don't need to increase our goods nearly as much as we need to scale down our wants. Not wanting something is as good as possessing it. ~Donald Horban
Anurag Batra
Anurag Batra is real life, first-generation entrepreneur who is Much Below Average (MBA) from the prestigious Management Development Institute, MDI. When he is not busy writing such columns, he can be reached at anuragbatrayo@gmail.com. Anurag is the founder and editor-in-chief of exchange4media group which includes exchange4media.com.
Disclaimer: The views expressed here are that of the author and does not represent the magazine's.
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