WorldTV is now (from an official point of view) a couple of weeks old, although its genesis is more like 11 years. In my last posting I promised to document some of the inner workings of a Web 2.0 video startup, so here goes…
My partner and I decided a few weeks back we would bootstrap our new business, using personal funds with help from friends and family. Bootstrapping is a Silicon Valley term, and basically means doing things on your own, without the involvement of venture capitalists or other traditional investors.
Bootstrapping typically implies doing things economically, unless you happen to be extremely wealthy. It’s a more natural way of doing things, but in historical terms is quite unusual as a means for starting a technology company. With the advent of the web, and much lower costs for starting web-based businesses, bootstrapping has become a more common option for many startup entrepreneurs.
The advantages of bootstrapping are that you hold onto the vast majority of your company, at the point where giving it away is the most costly. Most VC’s and Angel Investors typically ask for around 40-50% of a company in return for seed money, assuming of course you have the track record, savvy and connections to be able to get it in the first place.
In our case we had the track record through successes with the Millennium Photo Project, the architectural design of, and my own background working in television, entrepreneurship and startup consulting. We were also fortunate through some early networking efforts to have the business cards of a few VC’s. But despite this, we decided to go it alone, and see how far we could get without needing external funding.
The advantages of bootstrapping are:

  • You hold onto most (or all) of your business
  • You save several months of negotiating time (with VC’s)
  • You are free to direct your business as you see fit
  • A later investment (if needed), will mean either more money raised, or less percentage (equity) given away
  • It’s a viable option for many people

The disadvantages are:

  • You have much less money to work with
  • The money is your own, or that of friends and family
  • You miss out on the connections, advice and kudos that a VC can bring
  • It can be a lonely, terrifying and very stressful experience for you and your loved ones

As a startup consultant I have given advice to many small companies, and as an entrepreneur I’ve put much of this advice into practice. One of the mistakes that I and other bootstrappers have made in the past, is to not properly consider the funds needed to live on through the early months of a business. We decided early on that we would pay ourselves a modest fixed wage, enough to get by on and pay bills, for a period of six months.
Six months is the deadline we have given ourselves to make serious progress. With progress comes the ability to go back to friendly investors, raising more money to keep going, or approaching VC’s and getting a better deal than we would have at the start.
This idea of progress is very important. VC’s and investors call it ‘creating value’. In our case, we hope to have two major products launched within 6 months, with those products being used by the public and showing good signs of promise.
To this end, in the last two weeks we have…

  • Setup an office in a rented cottage that is far from anywhere (and cheap)
  • Got computers working and SkypeIN phone numbers set up
  • Hired our first full time employee – his name is Dmitry and he lives in the Ukraine
  • Written a tech spec for our first product so Dmitry can start work
  • Begun looking for graphic designers to overhaul the ‘home’ built design of our website

We’re raving about…

  • The cost of flights between Ireland and the UK (£10 one way inclusive!)
  • The Olympia Dualphone – a wicked cordless phone for Skype
  • Our new high-def camcorder – the first to record to hard drive, and one we’ve been dreaming about for years
  • Our ability to focus and work hard that comes from being in the countryside

We’re not so thrilled with…

  • The reduced options for Internet delivery of stuff in Ireland
  • The strain of being away from loved ones

I’ll have more on all this in my next posting on the subject.

Leave a Reply

Your email address will not be published. Required fields are marked *

Receive future blog updates by email