👋🏾 Hi friends!

And,,, we’re back!

Time flies when you’re having fun busier than you can imagine! Having returned back from Italy at the end of August, it turns out things seemed to be moving and shaking in the world of venture.

Last week I was on a panel with Mercia Ventures talking about the joys of bootstrapping (more on that below) and in a couple of weeks or so I’ll be talking at Niyo Fest where I’ll be talking about Levelling the Playing Field: The Gender Finance Gap – come join me in Birmingham for a celebration of technology, culture and community 💪🏾

I’m well underway writing about all the things I’ve learned from the last couple of decades as founder, CFO and CEO, so sign up for early access to Off Balance – The Book and feel free to share with anyone else you think might enjoy it 😄.

Now let’s get down to business…

In this weeks Off Balance:

🎙️ Joe Seager-Dupuy from True on the podcast to talk venture, consumer and retail and his time at the Branson Family Office.
🥾 Some reflections on bootstrapping.

For the first episode of the new season of Nothing Ventured we spoke to Joe Seager-Dupuy, Investment Director in the VC Team at True., a consumer and retail focused investment and innovation advisory firm based in London with circa $1bn of assets under management.

True’s VC Fund invests into Pre-Seed to Series A startups operating in the consumer and retail vertical, both B2C and B2B.

Prior to joining True, Joe was a Director of Corporate Strategy and Development at Virgin Management, the Branson family office, and had spent the early part of his career in strategy at WarnerMedia and OC&C Strategy Consultants.

In this episode, we talked about:

🐐 How there is something to be said to getting beasted pretty hard early in your career.
🤯 How Richard Branson has repeatedly done and created improbable things throughout his career.
❓ How family offices differ from VCs in how they invest in venture.
🌩️ How it’s been a perfect storm for consumer businesses.
🛍️ How 60% of the GDP of most western economies is consumer spending – 60 trillion globally, 15 trillion in Europe.
👖 Will AI agents be buying your clothes in the future?
⚽️ Joe’s contrarian opinion is that Ipswich will win the premiership in the next 10 years.

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Now let’s get into it.

Off Balance

On a recent panel in Leeds, I got the chance to sit down with Kiran Mehta, investor at Mercia, Michael Cleavely – founder of CoComply, Dan Rosenberg – cofounder of LinkyThinks and Lucy Bulley – fractional COO to talk about the intricacies, issues and opportunities that bootstrapping your business offers.

It was a pretty robust conversation and some super interesting questions from the audience, I’ve tried to distil it all down into my top takeaways below…

Yes, but what does bootstrapping actually mean…?

Firstly, let’s clarify something, some folk think that if you’ve only taken on a bit of angel investment, you’re a bootstrapper, but the reality is that bootstrapping means literally funding the business on its own steam with revenue as the only source of capital you’ve got to grow.

With that out of the way, here were the things that really stood out for me by the end of the conversation:

1. Not all (most!) businesses should not take on venture money.

If it wasn’t apparent already, whilst I work with a lot of VC backed businesses (or maybe precisely because I do), not every business is suitable for the venture model. It needs to be in, or creating, a market that has the potential for incredibly outsized outcomes (the famous fund returning unicorns so sought after amongst VCs).

If your business doesn’t fit the profile of scaling hard and scaling fast whilst generating incredible value without needing costs to scale linearly with revenue – then venture probably isn’t right.

2. Know yourself first, character and ambition will have an impact.

Beyond the ability to scale, you have to really understand yourself before taking on venture funding (or any funding for that matter).

I’ve found over time that I really don’t like being beholden to others (probably why I consider myself unemployable) so I would probably not take on external investors in anything I might build from here on in (having done it once I know for sure it’s not for me!).

Unless you – on top of the ability for your business to scale – have the ambition and unrelenting drive to push your business in a certain fashion, you might well be better of bootstrapping.

3. Scarce capital requires focussed decisions, but not necessarily slow ones.

When you don’t have a lot of cash to play with, you have to think very hard about what is going to move the needle most and provide the best return on what you spend. But that doesn’t mean that you should run your business in a state of decision paralysis.

Be considered, thoughtful and thorough in your decisions, but make those decisions as quickly as you can.

When you have a lot of cash, you can afford to take more bets to see what works best – that’s not to say you should spend without thinking, but at least you have the option to run experiements in parallell.

4. There is no magic number to get to if you do want to raise external capital – market, traction and speed to scale matter more.

Lots of people think there is some kind of revenue number that you have to reach in order to raise VC money, but many of the VC backed businesses I know raised very early in their lifecycle and often pre-revenue.

The more important thing to consider is whether it has the technology and shows the traits to be able to get to venture scale.

5. R&D heavy businesses lend themselves less to bootstrapping as you need capital to build.

If you’re building in the hardware space, or a very tech heavy business then it’s a lot harder to bootstrap. Most of these types of ventures need a lot of cash to get off the ground and to build out product substantially enough to start testing the market.

Many bootstrappers will go out and do some consulting to fund their development which works better for pure software / SaaS ventures, but might be a bit harder for the R&D heavy businesses I mention.

But it’s also not impossible, you can apply for grants, take out loans and potentially find a reference customer that might fund part of the devlopment – but the reality is that it’ll be hard to find someone who can fund enough to make it work.

6. Get out of the building and talk to customers – keep iterating.

Both founders on the panel said this a few times, and let’s face it, whether you’re bootstrapping or not you have to get out of the building and speak to customers.

Not only will that help inform your product, but it’ll also help you ensure that you’re spending money in the right areas.

7. Enterprise customers need a complete solution, consumers might be a bit more forgiving.

When you’re bootstrapping, you have to think about how ‘complete’ your product (if it’s a software business) needs to be before you can take it out to potential clients.

The reality is that enterprise clients are going to be less inclined to buy a half baked product so you’re probably going to have to spend more time and money to build out something acceptable whereas consumers can be a bit more forgiving – one of the founders told us that for their edtech business, they spent most of their energy on getting the content right and left the platform fairly raw until they had validated demand for the content.

8. Your tech is almost always better if you can build in house.

This might be slightly contentious, but you might find that if you outsource your tech development to an agency, you either don’t get the product you commissioned, or don’t get it in the time you need it, or don’t end up paying what you thought you would.

In fact, even if you do use an agency, ultimately you’re going to have to find a way to bring your development in house in any case.

Clearly, when you are bootstrapping it’s hard to bring on employees full time, but you might want to consider bringing someone on part time or as a contractor as opposed to hiring an agency, this way you’ll probably be closer to the development proceess and more able to course correct in real time.

9. You can still get to great outcomes when bootstrapping, it just might take longer.

People often assume the only way you can get to a huge outcome is by taking on venture capital, but there are some pretty famous businesses that boostrapped their way to success – look at MailChimp, BaseCamp or GitHub if you want some inspiration.

Equally, Shopify bootstrapped for 6 years before taking on venture funding and is now valued at well over $100 billion.

10. Building a business is HARD whichever route you take.

Frankly, whether you choose to bootstrap or take on venture capital, building a business is difficult and in either case, you are going to have different challenges to consider.

The most important thing is that you’ve chosen to build, and there is nothing more gratifying than that 🚀

As always, my office hours are open, if you’d like to chat about this or anything else, just grab some time 😊.

I hope you found Off Balance #50 useful. As always, I’d love to get your feedback and understand the sort of topics you would love to hear about.

Just hit reply to this mail or drop me a line at [email protected] and let me know 😊

🚀And that’s a wrap for this edition of Off Balance – I’d appreciate your feedback so just reply to this email if you’ve got something you’d like to say.

📨 And if you think someone else might love this, please forward it on to them,

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That’s it from me so until next time…

Stay liquid 🙂

Aarish