I’ve bootstrapped my edtech startup for 5 years. Here’s what I learned.

Photo credit: Andy Chilton

We seem to be right in the middle of a startup boom. Every day, we hear news of one or the other startup raising $X million in funding. This has left a lot of aspiring young entrepreneurs confused about how and when to raise funding, and how much to raise.

However, hardly anyone seems to be digging deep on the most important question, “Why raise funding in the first place?”

While it’s true that there are startups that need external funds to fuel their growth, there are certain types of businesses that can bootstrap their way to success. Entrepreneurs need to carefully evaluate whether they need funding to achieve their vision. However, they shouldn’t forget that in either case, they’d need to devote time and persist in growing the business. Funding is not a short cut, and neither is bootstrapping.

In its five-year journey as a bootstrapped edtech startup, Edureka made some right moves, and also plenty of wrong ones that it has since learned from. To help young entrepreneurs as they embark upon their startup journey, Lovleen Bhatia, co-founder and CEO of Edureka shares some lessons from his experience of running a bootstrapped company.

1. Create value, don’t chase valuation.

Never be in a hurry to raise funds. Create value first, valuation will follow. Your priority should be to provide the best possible customer experience and creating value for your ecosystem, including partners, employees and vendors.

Never compromise on creating value just to create superficial valuation, if you want to lay a solid foundation for sustained growth.

 Create value first, valuation will follow.

Imagine a news headline: “XYZ company raises $Y million in funding”. It is very tempting, but distracting too. A lot of entrepreneurs commit the mistake of optimizing their business for what they believe investors would like. They digress from their core vision and focus on metrics that “might” impress potential investors. This can be fatal. As a bootstrapped company or any startup for that matter, you cannot afford to lose focus.

At Edureka, we’ve maintained a laser focus on our vision, which is to to revolutionize the way people learn. By putting our stakeholders (customers, instructors, employees and partners) before profits, we believe that the value we create for them is going to create multifold value for us in the long run.

2. Funding is a means, not the goal.

The later you raise funds, the more solid your value proposition would be, and the better position you will be to capitalize on the funds you receive.

Before you go after funding, ask yourself a few simple questions:

• Can you grow without funding? If yes, for how long and by how much?
• Can funding help you catalyze your growth?
• Do you know exactly where you would invest the funds and what returns would you get?
• Is your growth restricted by the need for funds?

Answering these questions will help you evaluate whether you should go for funding. If you are extremely confident of your idea, you wouldn’t really want to dilute your stake too soon. So, sustain and grow for as long as you can. At a later stage, investors would too appreciate the fact that you sustained for so long, and it would be a true testimony of your confidence in your idea.

3. Test, iterate and scale. Don’t fail big, fail fast.

4. Don’t ape. Evolve.

5. Suspect, never believe blindly.

6. Don’t be penny-wise, pound-foolish.

7. Rev up during tough times, turbocharge during the good times.

8. Be transparent, trust your employees.

9. From hungry to hungrier.

10. Company culture – yes, it matters in a bootstrapped startup too.

11. It all comes down to the all-important customer.