Is Bootstrapping A Good Idea?

Industry experts say that the Indian startup landscape has been growing tremendously in the past few years. Our country has been positioned the 3rd largest startup community after US and China. What is really overwhelming is the fact that creative and motivating people over the days have come up with unique ideas towards their journey of entrepreneurship.

However, one of the most important things that startups consider is funding. We did already try acquainting you with some of the easiest hacks to secure funding, but a more important point is to gain clarity on whether you should continue bootstrapping your fund or fetch funding.

BOOTSTRAPPING

Funding your own business allows you to focus on scaling the business more and less on the relationship with investors. This helps in making independent decisions about the future of one’s future, thus retaining a high proportion of shares. As and when a company would generate revenue, you realise that it was a good decision on your part to not go for funding.

However, on the other hand, if you are looking forward to scaling your business quickly, getting resources from outside or capital might be beneficial.

Let’s have a look at the pros and cons of Bootstrapping.

Pros:

Enjoy The Complete Ownership of Your Business

If you are a bootstrapped business, you have the freedom to enjoy the complete authority of your business. Even if you have a co-founder on board, the margin of your share continues to remain profitable. There might be chances of getting diluted if funds were being raised.

Focus Becomes More

Impressing investors is a tough nut to crack indeed. Generally, entrepreneurs that focus on growing and bootstrapping their business, spend their entire time and focus on improving their products and services.

Easier Pivoting

When you have a bootstrapped business, you can pivot much easier, considering the fact that there are lesser burdens involved from investors and stakeholders. It’s indeed a blessing to have absolute decision-making power over your project. It’s beneficial till the time you continue getting clients’ feedback that strengthens a brand in the industry.

What to Do?

As we did highlight some of the positive aspects of being a bootstrapped business, however, one of the biggest red flags is the problem of scaling ahead. In case, anybody wants to scale further ahead, then securing funding is advisable.

Fintech Startup Fetches Funding From Saif Partners

Fintech Startup Fetches Funding From SAIF Partners

CashFlo, India’s first integrated, multi-funder marketplace has raised $3.3 Mn in series A funding from SAIF Partners, and select angel investors that include Ashish Iyer (previously Sr. Partner at BCG) and Arpan Sheth (Partner at Bain & Co Managing Director, Bain & Co. ) among others. Targeting a $100+ billion untapped category in SME lending market that’s currently operating in a highly-traditional manner, Cashflo is on a mission to solve one of the biggest pain points of businesses in India and globally – that of access to affordable credit.

Currently present in the top 7 metro cities in India, Cashflo is catering to SMEs across 30+ cities. The infusion of new funds will further be utilized for business expansion, platform enhancement and building a high calibre team to champion their robust growth plans. They are aiming to expand to about 75 employees in the next 24 months.

Incorporated in September 2017, Cashflo helps sellers undertake invoice discounting through their exchange, and get early payments to manage their working capital needs while Buyers improve their EBITDA margins or optimize their working capital by extending payables days, creating a win-win situation for all. To implement this, Cashflo ties up with anchor corporates and rolls out supply chain financing program for their entire base of vendors and dealer/distributors – MSME and non-MSME. Unlike traditional solutions that typically leverage a single source of funding – either a financial institution or buyer’s own treasury surplus, Cashflo takes a holistic, integrated marketplace approach giving buyers, for the first time ever, the flexibility to decide their funding mix across multiple sources while funding the sellers. This unique multi-funder model with stock-exchange like dynamic pricing, ensures coverage of the entire supply chain and enables even the smallest SME to access funds at 1-click on their phones on their own terms.

Ankur Bhageria, Co-Founder & CEO, Cashflo opined, “As an organisation, we are focused on democratizing access to credit in the SME space and tapping into new sources of liquidity for the credit economy, while building a holistic ecosystem for the businesses on our platform in the long run. ”

He added, “Investment from SAIF Partners is a validation of the market opportunity and a testament to the hard work gone in to build this business so far. We are excited to partner with SAIF and be able to leverage their expertise and know-how, especially in financial services, in this next phase of growth. This round gives us the necessary fuel to become one of India’s leading supply chain financing platforms in the years to come.”

Announcing the investment Mridul Arora, Managing Director, SAIF Partners said, “We are delighted to partner with Cashflo which is riding on the massive tailwind of supply chains getting more organised & consolidated; with eventual un-bundling of credit. We, at SAIF Partners, have a strong belief in the founding team’s vision of creating a multi-product , highly liquid and value-accretive credit platform ”.

Presently working with India’s leading corporate houses like the Tata Group, Aditya Birla Group, Bajaj Group and large corporates across sectors such as auto, retail, pharma, capital goods, textiles, logistics, and services among others, the company has garnered an order book of over Rs. 10,000 Crores of throughput from its existing contracts, making it the fastest growing platform in the country in just 2 years of active operations.

Seed Funding: When Do You Need It?

A lot of times, startups are in a fix as to whether or not they should raise funding, and if so, what kind of funding should they be opting for? In this section, we want to acquaint our readers with the pros and cons of seed funding. But first, let’s try to understand why is seed funding so very important.

Importance of Seed Funding

Well, seed funding is the early-stage investment that is required by a startup to get off the ground and gain some traction. This is considered a very important stage in the journey of a startup, since it allows them to grow, work on the product or idea. Also, develop a team and look into the other aspects responsible for running the company.

When Is The Right Time for Seed Funding?

Startups can fetch money whenever they want to, or so is believed. However, there are a few things that entrepreneurs might know if they want to get the required amount of funding that they want. Here are a few things to consider, before raising seed funding.

Do You Have the Right Team?

It is very essential to have the right human resources to work on ideas or products. Once you have the right team, you would treat everyone with respect, loyalty and care. So that this would ensure that the employees are invested in the company as much as the founders are.

Do You Have Validation From Industry Experts?

It is advisable that you take valuable feedback from experts in the field that you are operating from. This would be inclusive of advisors, angels, partners and industry players. This is a way in which startups can improve their product or idea, before the market knows about it or the early stage investors.

Do You Have the Prototype Ready?

In case you are ready with a product or software that you are wanting to implement, now is the right time to do so. You would need to have at least a working prototype which would be showcased in front of potential investors. If you can’t showcase a prototype, then you are clearly wasting the investors time.

Have the Potential Investors Been Vetted?

In terms of an investor meeting, it is best to do some research beforehand about potential investors. This would kind of help in building a relationship with investors before the pitch. Most investors are more inclined to come aboard with startups they find that already have background knowledge.

Did You Test Your Product?

To be on the safe side, it is always a safe option to test the product before you plan to raise seed funding. Once you get to know your customer’s needs and behaviour, this would allow startups to present a real world scenario of the product’s effectiveness.

The Takeaway

Though raising seed funding might seem pretty easy from all that we talked about, however all of us must clearly do our homework before we look forward to raising one.

Cryptocurrency: Is It Worth It?

Talking of investments, a lot of us have varied opinions. While some might be in favour of mutual funds, there are others who rely more on ‘Fixed’ and ‘Recurring’ deposits. But, a major part of our financial plans are comprised by cryptocurrencies or discussions encircling around them. Over the days, people have expressed a lot of interest in the same. But do we actually know what cryptocurrency is?

WHAT EXACTLY IS CRYPTOCURRENCY?

As per the web and Wikipedia, cryptocurrency is a ‘digital asset designed to work as a medium of exchange that uses strong cryptography to secure financial transactions, control the creation of additional units, and verify the transfer of assets.’ To simplify it further, cryptocurrencies are virtual or alternative currencies. We may further classify cryptocurrencies as; Litecoin (LTC), Ethereum (ETH), Zcash (ZEC), Dash (DASH), Ripple (XRP), Monero (XMR), Bitcoin Cash (BCH), NEO (NEO), Cardeno (ADA), and EOS (EOS).

IS IT GOOD OR BAD?

Like every other time, people have placed their viewpoints. But how do you know which is real and which fake? We have selected some thoughts from industry leaders who might help you get an inkling.

PRO-FOLKS

“In the next few years, we are going to see national governments take large steps towards instituting a cashless society where people transact using centralised digital currencies. Simultaneously, the decentralised cryptocurrencies – that some even view as harder money – will see increased use from all sectors.” – Caleb Chen, London Trust Media. “While it’s still fairly new and unstable, relative to the gold standard, cryptocurrency is definitely gaining traction and will most certainly have more normalised uses in the next few years. Right now, in particular, it’s increasing in popularity with the post-election market uncertainty.” – Sarah Granger, Author and Speaker.

Some industry leaders feel that within two years, the world would come to a place where people can shove their money under virtual mattresses through cryptocurrency. Japan has widely accepted cryptocurrencies, it has removed the 8 percent sales tax while buying Bitcoin and other cryptocurrencies. Popular currencies in Japan are Bitcoin, Ripple, Ethereum, XEM, and MonaCoin.

ANTI-FOLKS

Jason Bloomberg, Contributor to Forbes Magazine says, “Enjoy the world of permissionless, blockchain-based cryptocurrencies while you can, because its days are numbered. And don’t lose your shirt when it all comes crashing down.” American economist Nouriel Roubini tweeted, “Cryptocrazies are also criminal Cyber-Terrorists.” He also claimed that his consulting firm, Roubini Global Economics, was targeted in a 2015 denialof-service attack because he criticised bitcoin.” Bitcoin has lost half its value since mid-December 2017. Billionaire Warren Buffett said on 11th January 2018, that he would never invest in bitcoin or other cryptocurrencies, and also predicted that the wildly popular assets were in for a fall. “I can say almost with certainty that cryptocurrencies will come to a bad end,” Buffett told CNBC in an interview.

OUR VIEW

We have tried to acquaint our readers with both sides of the coin, as the authenticity of this currency is questionable and debatable. Analysing both sides, we leave it to you, to decide whether to invest in it or not!