True Entrepreneurs Bootstrap From the Start

Bootstrap, startup, startup capital, raising capital
I remember years back when I use to think, why is it difficult to raise fund for business but easy to see both corporate organisations and individuals promoting entertainments and sports. Thinking like a typical aspiring entrepreneur, who always laid more emphasis on startup capital than the so called vision and mission that drive the lunch out. But today, I know better. Raising money for a start-up is becoming easier but building a profitable, sustainable business is still really hard.

Dear aspiring and potential entrepreneur, are we really trying to follow the step of the successful once that follows this path? I doubt that. It’s unfortunate that you have never take time to research, read, re-read and digest the biography of your so called mentors. Many of them resulted to bootstrapping without doubt and those who do knew so well that the fund is not for fancy office and car to show their idea is a golden one.

I read recently the interview Muyiwa Ogungboye granted techpoint on how he sold everything he had to seed-fund eStream Networks.

“Investors want to see how you are going to subject yourself to hardship. My business plan, for example, didn’t include anything like an official car, salary or welfare package for the MD. The investors spotted that but didn’t say anything.

It wasn’t until the first board meeting that they all agreed that I should have an out-of-pocket allowance. If I had written the business plan to include a Prado SUV for the MD, they would probably have said “this guy is not serious”. But I was not pretending. I honestly felt the best way to grow the business was to start very lean.

I had also done something very risky. Before coming back to Nigeria, I was living in England and I had a house. But I sold everything I had, including the rug, and relocated my family to Canada. My wife was still pregnant with our first child then. I remember the day we left England, we slept on the floor, using a pile of newspapers as a makeshift pillow.

Majority of the proceeds from selling everything was put into kick-starting eStream Networks. All my wife said was, “I hope you know what you’re doing?” and I replied, “I know what I’m doing. This thing will succeed”.

Because I had no money left, my wife stayed in a friend’s house in Canada while I returned to Nigeria. I only came back once for the child delivery and after that, I didn’t see them again for about another 6 or 7 months. So I watched my baby grow up on Skype. All these things put together were what the investors saw that convinced them I had something special.”

If truly charity begins at home, it means this mentality has been weaved into our system from childhood. A good anecdote to back this up is that of my trainees and students who can afford mobile phone worth twice that of their training fee but cannot afford to pay the fee while I, the owner is using a mobile phone that worth quarter of theirs.

Today’s typical start-ups want to live large on investors’ money. When I read about liquidation of some start-up with beautiful offices, cars and operations, I wonder what the problems are all about. A close look always reveals on top of the list to be mismanagement of fund.
Don’t Sacrifice Your Creativity
You need to stay creative and continue improving on yourself and operations to achieve the vision you are building the business on. Though taking money from investors might seem like the path to success, bootstrapping helps you to stay scrappy and to realize talents you may not know you even had and gives you the opportunity to attract the right talents at the initiate stage of your recruitment.

Many entrepreneurs have lost their company control to investors who care less about your vision but the return on their investment. There is always a dark side to fundraising that is often left out of the narrative.

“When young entrepreneurs enter into investment agreements with established VC firms and investors, over 95 percent of the time it doesn’t end well for the entrepreneur. Fundraising is inherently designed to benefit the investor. By choosing to accept cash and the promise of five or so introductions, entrepreneurs relinquish their visions, and ultimately their control over the futures and fates of their organizations.” - Blake B. Johnson

Focus shift and tension set in, lowering your creativity level when you have debt to pay and or investors to please. Bootstrapping is hard, but it forces you to get creative with your strategy and come up with solutions you would never have thought of.

Entrepreneurs Believes in Delay Gratification
I think major part of entrepreneurship is to take risk. With fundraising, is this still applicable? Today’s entrepreneurs are trying to shift the risk but unfortunately want to take the glory. When you look closely, sometimes you will find it difficult to differentiate them from scammers. The few who raise money for real should know that transferring risk means you are as well transferring the benefit. If I have any advice as a solution to fundraising, it is preferable to share your vision with like minds to create a team to bootstrap your start-ups instead of millions of dollars from those who only care about return on their investment.

We live in a world of instant gratification. But in the entrepreneurial community, we need to remember to hold out, to take the time to build the business into something actually worth VC funding. 
I remember a discussion I have with one of my mentees who owns a school. He narrated to me that when he was starting out, he approached his bank for capital but was turned down embarrassingly. Few years down the lane, when he withstand the tough time to build his business, the same bank keep pestering him to come for loan.

There are numerous example of that same scenario. One popular one is that of Ayenis of Tantalizers. As an entrepreneur, I love it this way than me stalking banks and investors. This way, you will be the one that will chose who you will work with as a partner and when funding comes, you will be able to use the investment to scale quickly, not to figure out what you are trying to do. 



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