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See Research StudiesI graduated from Columbia Business School with a business degree in 2006. At the time, most of my friends headed south to Wall Street to plummy jobs in investment banking and venture capital. And me? I was launching a start-up. Given the times, I felt like I wasn’t creating something real if I didn’t raise VC funding. I definitely embarked on a road less travelled by trying to self-fund.
I launched Ivy Exec in 2007, while I was able to bootstrap the company through the first few years, we paid a “price” for our dogged commitment to organic growth. It was painstakingly slow. And, survival was a matter of frugality. The late 2008 market plunge and ensuing financial market disarray changed everything. Suddenly the F-word — “F-rugality” — was on everyone’s lips and minds. Somehow it had become “cool” to be frugal. Respectable.
Surviving until 2010 without external funding forced us to be bottom line driven from the outset. We obsessed over business essentials — finding customers and meeting their needs in the most cost effective ways possible. In 2010 we finally reached that steep “hockey stick” growth trajectory that every start-up founder aims for. Although we raised a small angel round, we haven’t spent that money as the business took off right at the time that we closed the round. We grew revenues by 350% in 2010 alone, and since 2010, we’ve grown another 300%. Today we have offices in two continents, a team of 30 people and we have no plans to slow down our growth. We are doubling up our revenues each year, while re-investing heavily into product development. We have expanded the concept of Ivy Exec from just a place where people find high quality job opportunities, to a place where highly qualified professionals interact and help each other advance their careers in more ways than one: mentoring, professional development workshops and webinars, access to exclusive jobs delivered by our in house retained executive search team, and much more. We have been able to achieve all this without VC funding, and this fact makes our team even more proud of our success.
How you choose to fund your company shapes the very way you think about your business and its future, and how you set your goals. So, before you begin polishing up that dog and pony show for the VC firms, here are some things to ponder:
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The Good, The Bad and The Ugly… |
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Self-funded, Organic Growth |
Other People’s Money (OPM) |
| 1. It takes you longer to build the final product/ vision that you set off to build. | 1. A cash injection allows you to move quickly to build and deliver product. |
| 2. A salary is a “luxury item.” Your salary is a function of what’s left over after expenses are covered. Quite often it’s ZERO in the early years. | 2. You typically get a salary with a round of funding. Not exactly life on easy street, but it’s something… |
| 3. You can’t build your dream team on day 1. You are dependent on hired guns and interns longer | 3. You can hire THE TEAM…almost from day 1 |
| 4. Because you don’t have the luxury of NOT making money, you find out sooner rather than later if your business is commercially viable. | 4. Companies relying on raised capital for years have folded when the money runs out because the business wasn’t commercially viable or the management was to relaxed about generating a profit. |
| 5. A tight budget imposes a healthy, bottom line self-discipline early in the game so expenses stay in line with REAL revenues. Or you fold… | 5. Externally funded start-ups are at greater risk for making quick (poor) decisions under pressure to spend their funding. And, expenses can quickly balloon to unsustainable levels that can’t be supported long term by REAL revenues. |
| 6. You remain clearly focused on business priorities since you’re immersed in meeting customer demands, making sales, and hitting bottom line targets. You’re relentlessly driven to pursue results by pursuing the “NEXT.” | 6. A comfy cushion in the bank may be a distraction – your day to day may be more about keeping investors happy than growing your business. You risk becoming detached from your business’s fundamentals and priorities. |
| 7. You fully control your business venture and have the freedom to make decisions and not compromise your vision. | 7. If you don’t deliver versus targets you promised (before you even knew what the business could actually deliver) you risk losing control of your business. So unless you are the next Google or you have a crystal ball, think twice before committing to targets. |
For my company, the win-win has definitely been the road less traveled.
Elena Bajic
Elena Bajic is the founder and CEO of Ivy Exec, a selective online career network for top performers.