Is Success Possible Without VC Funding?
Growing a successful tech startup is difficult enough with hundreds of thousands of dollars. Imagine just how hard it would be without any funding!
Impossible you say…Not according to Randy Frisch, COO of Uberflip, a Toronto-based interactive marketing and digital publishing software company. Founded in 2008 under the name Mygazines, Uberflip has grown to 19 employees and over 650 paying clients through bootstrapping.
Wondering how? Randy recently offered up five key strategies in an article on the Uberflip blog. Here is a brief summary:
1) Recurring Revenue – “It allows you to create predictable revenue month over month, as long as you manage to keep your churn (customers who leave you) down. Without predictable revenue, the decision of making that next hire, whether dev or sales, is overwhelming. You may think you can pay them this month, but what about three months from now if we hit a dry spell?”
2) SRED – The SR&ED Program gives claimants cash refunds and/or tax credits for their expenditures on eligible R&D work done in Canada. The best part of SRED is you can reinvest a lot of your R&D dev spend back into the business to fund next year’s projects year after year. This means all you have to do is find a way to carry the business in between annual claims.”
3) Government Grants – “A couple of the programs I’ve participated in include IRAP and Career Focus, which have covered up to 80% of a new hire’s out of pocket costs in the first year….Be sure to consult with your accountant or just do some research on your own to see what dollars are awaiting.”
4) Sacrifice – “I’m pretty confident I could be making a lot more money had I chosen a cushy downtown job or taken a slightly different path earlier in my career. But I chose to be part of building something that could grow beyond what I could control on my own.”
5) Scale – “No matter how much money you can get from family, personal savings or the government, it better be going into a scalable business model. Without something that scales and earns back your money in a reasonable time span, forget about ever going at it without VCs, let alone finding a VC who will listen to your story in the first place.”
Obviously, the decision to try and obtain VC funding or to go it alone depends on a number of factors. There are pros and cons to either approach that must be carefully considered.
