Manik Kinra co-founded Jade Magnet, a crowdsourced design marketplace, in 2009 and has since expanded the company’s operations to the Middle East and Singapore. Until October last year, Kinra and co-founder Sitashwa Srivastava, relied largely on bootstrapping and small but successive rounds of angel funding to build out their business. Jade Magnet now has a community of more than 6,000 designers and has paid out $410,000 to the community in fees for projects. Kinra shares some of his bootstrapping methods and mistakes and experiences with raising angel funding.
FIVE BOOTSTRAPPING TOOLS
1. Barter deals: We did a lot of collaboration in the form of barter deals with complementary service providers. For example, we partnered with printers to provide them designs and gave them a percentage of the revenue generated.
2. Prioritize marketing and sales early: While product development and technology was and is the core of the business model, we always gave marketing and sales equal importance. We used low cost or free marketing tools and networks like LinkedIn, email marketing and attended a lot of events with the audience that we wanted to focus on to reach out to more people. This helped us get some money flowing in and also enabled us to generate feedback from actual customers.
3. Build relationships with market influencers: We spent a lot of time building a list of platforms, writers, etc. who are influencers for our target audience. Built relationships with them to get talked about or have reviews on the product published.
4. Evolve faster-to-market sales models: Used sales models that enabled us to reach out to more people faster. Built an account management model (similar to the franchisee model in the traditional environment) to get access to customers faster and effectively.
5. Use local partnerships to expand markets: We’ve expanded geographically using partners with local understanding and networks to enable faster growth.
THREE BOOTSTRAPPING MISTAKES
1. Reluctance to take business risk: Though the entire premise of entrepreneurship is based on risk taking abilities, sometimes due to bootstrapping, we have ended up keeping things too close to ourselves which hindered our abilities to take risks and let go. In hindsight, if we had delegated more and taken some business strategic risks we would have scaled faster.
2. Recruitment for key roles should have been done faster: Startups in early days require heavy investments in people and training. We have left roles and positions open longer than necessary to ensure we had a lean team. Filling up those roles and positions earlier would have helped us build a stronger brand with multiple stakeholders. This also happens most with non direct-revenue generating roles, though the role plays a significant role in enabling complete delivery.
3. Inadequate focus on training people: We were not able to focus on training and enhancing people capabilities, in our case both for internal and external stakeholders especially the ones executing requirements.
THREE LEARNINGS FROM BEING ANGEL-FUNDED
1. Angel investors offer more than money: It is always more effective to look at angel investments as not just monetary investments but also an opportunity to build on the core team’s skills. The investments enable more people to have skin in the game but, it is vital that every individual angel investor possess certain skills which enable the team to become stronger.
2. The more active, the better: Active investors add tremendous value and are twice the worth of the cash investment. Their ability to guide you through the process ensures that some of the mistakes aren’t repeated. In the case of just monetary investments it would have led to cash+time loss.
3. Sharper focus on bottomline: Because there is never a huge pile of cash in the account, it keeps everyone on their toes all the time. Also, it ensures that the focus is on real business value generation.
Image credit: Jade Magnet