5 tips from a tech founder on bootstrapping your startup

When we talk about tech entrepreneurship, more often than not, we think about the high-profile, sexy world of venture-backed startups. Yet bootstrapping – where a business is financed through its own savings and operations – can often be a better strategy. 

Using RoomRaccoon as an example, we wanted to build the best possible product for our clients. That meant we needed to be able to make quick decisions and have complete control of the process. So turning to VC money felt less attractive.

Bootstrapping was fundamental to the growth of RoomRaccoon and allowed us to innovate our MVP at lightning speed. Now six years later, RoomRaccoon remains completely autonomous and unburdened by the financial market dynamics and trends affecting VC-backed tech companies today.

If the collapse of Silicon Valley Bank taught us anything, it’s that entrepreneurs need to pay attention to the dynamic economic landscape and rethink funding options. Here are my tips for self-funding a tech startup:

Design a business model that generates cash quickly

If you choose the bootstrapped route, it is critical to have a business model that generates cash as quickly as possible to avoid burning through your thin reserves. As a SaaS company, incentivising our clients to opt for an annual subscription was critical to ensure that we had substantial cash flow from the get-go.

We found that having a laser-sharp focus on generating revenue was actually easier as a bootstrapped company as we were free from managing time-consuming investor relationships.

Choose the right team and co-founder

In the early stages of a startup, you need a team of generalists who can fulfil several roles and are dedicated to your company’s cause. This includes the founders! When Nadja and I co-founded RoomRaccoon, she was manning our sales, customer support and marketing while I was building the MVP.

We certainly didn’t have the budget to outsource or recruit expensive SaaS experts. Instead, we got our hands dirty and found amazing junior talents that we knew had the potential to grow into great performers.

Never spend beyond your means

With a bootstrapped business, it is crucial to consider every payment that goes out and only spend on what’s necessary. As a founder, that might mean going without a salary at the beginning. My advice? Save wherever possible. Believe me, every extra dollar that you can put back into the business counts.

Start with free versions of tools where possible, don’t outsource jobs you can do yourself, focus on organic traffic over paid, and look for free publicity options where possible.

Don’t wait to invest in your website domain

Not all entrepreneurs realise that as soon as you gain traction, the price of domains can increase exponentially, especially when you have to haggle with domain traders. When we started RoomRaccoon, we were quick to claim all of the domains for potential market expansion. This helped us save costs on unnecessary expenses as we grew. 

Leverage free advice

It’s super important to ask for help when you need it. One way you can do this is by finding inspiring mentors and building a network of like-minded people that you can consult on a day-to-day basis. Nadja and I found a number of passionate and experienced entrepreneurs who were genuinely excited to help us at no cost. This might have substituted for the lack of VC coaching in the early days.

Building RoomRaccoon from the ground up hasn’t always been easy, but it has been rewarding. Nadja and I are proud to still own 100% of our company and are setting a good pace at hitting the  €6M ARR milestone! We might have chosen the challenging route, but operating on an infinite runway was worth the extra sweat.