You don’t have to look far in the local or international media to read about the latest startup that raised capital, be it a small seed stage investment or later stage Venture Capital round. The stories are usually written in such a way that it almost seems like the startup is already very successful and with the founders often glorified on social media as heroes. However, from my experience I know that this fundraising exercise is only a small milestone compared to what the company still needs to achieve to be successful. In my career as an entrepreneur I have raised different types of funding for some of the companies I started, ranging from Angel funding to Venture Capital. Although it felt really good every time I closed a funding round, this euphoric feeling usually disappeared quickly when reality set in the next day and I realised that there are so many things to be done to build the company.
I have often said that entrepreneurship is like an emotional roller coaster and that every little success needs to be celebrated in order to stay motivated, but I don’t want budding entrepreneurs to even think that being an entrepreneur is about jumping from one to the next funding round. That is simply a wrong perception that can lead to the false ideology of building startups for the sake of raising as much capital as possible, without having the vision and desire to see through challenging times.
However, I think anyone who is contemplating to start a company should learn how to bootstrap before even thinking about raising external funds. Here are 5 reasons why:
- The learning curve is as steep as the first time you tried riding a bicycle. You will fall and it will hurt, but if you know how to pick yourself up, you will get the hang of it at some point. Yes, you will make mistakes when you start a business the first time, but the important thing is that you learn from it and move on. And trust me, you will not give up easily if your own hard earned money is at stake.
- You will develop an eagle’s eye for getting revenues. Bootstrapping entrepreneurs often develop a “merchant mindset” that will enable you to smell potential revenue opportunities from far away.
- Bootstrapping will teach you to constantly seek for better ways of conducting business. This means you are conscious about the cost side of running the business and agile to respond to challenges that come your way.
- Bootstrappers are forced to test their assumptions carefully and validate their business model before scaling up. Ultimately, investors would much rather invest in a business with solid foundations and metrics that demonstrate a viable business model, than a lofty looking pitch deck with figures plugged out of the air.
- Finally, bootstrappers will have full control of their company. Especially in the early stages of a business it is important that the founders can execute their vision for the company without having to compromise with investors that are just looking to protect their investment. However, I believe it is really useful for first time founders to engage mentors or relevant industry experts through an accelerator or other programme that will bring value to the company.
I would encourage any entrepreneurship education programme or accelerator to not only emphasise the importance to raise funds or crafting a perfect pitch, but rather to educate founders to become business savvy founders with a solid understanding of bootstrapping. Despite it not being seen as glamorous and perhaps it won’t give you much media attention or stardom in the early startup phase, the bootstrappers may well be the unsung heroes that are going to build the successful ventures of the future.
Tan Sri Dr Jeffrey Cheah, Sunway Group’s Founder & Chairman, is probably one of the best examples of someone who learnt entrepreneurship and bootstrapping through the school of hard knocks and went on to build one of the largest conglomerates in Malaysia. His success story is an inspiration to me and many other budding entrepreneurs looking to start a business. The integrated township in Sunway City has become a vibrant ecosystem with fertile ground for innovation to flourish, which is further amplified through entrepreneurship education in Sunway University. Amongst other things, Sunway University offers two different Bachelor’s Degree Programmes in Entrepreneurship and there is the Sunway Innovation Labs (iLabs) that organises inspiring talks, ideation competitions, and hackathons to provide students with experiential learning opportunities and the tools to prepare them for a potential career in entrepreneurship. In addition, for the final year students and graduates there is an opportunity to participate in an accelerator programme to launch and build a real startup.
