Insight of the Week: Bootstrap your startup
Let’s look at 3 important trends happening today.
First of all, last quarter, global venture funding scored the second-largest drop in funding in a decade, falling by 23%. Fintech startups accounted for less than a fifth of all the funding while digital health startups are also experiencing a 32% drop in investment from the last quarter.
The second thought-provoking trend is a decrease in the number of unicorn startups (a.k.a. companies with a value over $1B). Data shows that the number of unicorn births has fallen by 43% from the 2021 year's peak.
And thirdly, Y Combinator shrunk the number of startups within its accelerator for the Summer 2022 batch to 414 startups (which is a 40% reduction).
All the above speaks to the significant throttling of money for startups amid increased interest rates by Fed. Since less capital is available, you need to be ready to bootstrap your company. And here are some ways of bootstrapping your business:
Outsource expertise rather than hiring staff
Be smart about your expenses
Identify alternative sources of revenue
Find a co-founder
Focus on MVP and not the final product
Create a “Purple Cow”. In other words, have courage to be creative and stand out among others in the marketplace.
Save funds you would spent on a physical office. Keep your operations online.
Go for funding to SBA, local banks, or specialized credit resources. We are not talking about Russian oligarchs here, just to be clear.
With or without unprecedented levels of money flowing into startups, you have plenty of opportunities to launch and become the new Coca-Cola, Dell or Oracle. It is all about developing strong customer acquisition and retention strategies. And you can do it!