June 9th, 2010 by Duane Jackson
There’s been a lot of talk in the blogosphere this month on the topic of organic growth or bootstrapping vs taking external money (ie, VCs, Angels, public listings, etc).
I think this is mainly fueled by Tony Hsieh talking on inc.com on “Why I sold Zappos” and Sridhar Vembu’s post on why Zoho haven’t taken VC money.
A couple of the articles have referenced my company, KashFlow, directly.
- At KashFlow, we’re bootstrapped – spending only what we make.
- Our main competitor is a publicly-listed company that has raised a LOT of money from the markets and is spending it very quickly (to great effect I might add).
- Another established competitor is trying to raise €5m to fund growth
- A small startup recently announced a “financing deal” from “strategic investors”. No names or amounts.
I had quite a lengthy conversation with Ben Kepes at CloudAve which resulted in this post – I won’t repeat everything I’ve said there but I do encourage you to go read it if you’re interested in why we didn’t look for big money early on and haven’t since.
I would however add a P.S. to my comments to Ben:
I’m not against the idea of VC money entirely. It has it’s uses. But not for us, not right now.
A time may well come when it’s the sensible thing to do for a number of reasons or an attractive deal may present itself. That might be next month, next quarter or next year. But right now, we don’t need external money to execute our strategy so I’m not getting distracted by looking for it.
The only reason for taking money right now would be to get Mike Butcher at TechCrunch to give us some exposure and a massive spike of traffic.
Update: Mike picked me up on my closing comment above. He also flagged up an interesting post he made a couple of years back about how to get coverage on TechCrunch and other media outlets. Well worth reading in full.
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Tags: bootstrapping, cloudave, VC, zappos, zoho
Posted in Ramblings, Small Business | 4 Comments »
July 24th, 2009 by Duane Jackson
We’ve got some huge positive changes happening here at KashFlow – and it’s all because I was asked one question.
We’ve had lots of interest from Venture Capitalists over the past year or so, and a few months ago I thought it might be fun to have a chat with some of them to see what was possibly on offer.
One particular expression of interest caught my attention – essentially I’d have taken a 7 figure sum personally and the business would have a few million to help it grow more quickly and I’d still have a reasonable amount of equity. Nice!
Being relatively new to this kind of thing, I spoke to a few of the elders (they’ll kill me for calling them that!) on the tech scene for some advice. Mainly William Reeve and Alex van Someren.
William asked me what I’d actually do with the money which really got me thinking. I told him we’d relocate the business to London, hire a CTO I’ve had my eye on for ages plus lots of other great stuff that I’m not going to disclose publicly – but the move to London is the pivotal part of it all.
He then asked “If moving to London is such a good idea, why not do it anyway?”
A little time spent with a spreadsheet showed we could move to London, hire the CTO and implement a lot of the plans for far less than I thought. In fact, we can actually fund it out of existing cashflow.
So I’ve said “thanks, but no thanks” to the VCs, hired the CTO I wanted and negotiated a lease on a new office in London (SE1).
It still leaves me without the big chunk of capital that would have kept the family happy and enabled us to move down to Brighton as we’ve been planning for a while. But we’re moving to Brighton anyway now - just more modestly than originally planned. Once we’ve grown some more I’ll consider selling some of my shares to get some capital together.
So the question to ask yourself is “What would you do with your business if you received a few million in investment?”. Then look at those plans, pick out the important parts and find out what it’d really cost to do it.
You might be pleasantly surprised.
Tags: Alex van Someren, Brighton, funding, growth, London, VC, William Reeve
Posted in Small Business | 7 Comments »
