“Look at what the top stories are, and they’re all about raising money, how many employees they have, and these are metrics that don’t matter. What matters is: Are you profitable? Are you building something great?”
— Jason Fried, founder and CEO of 37Signals
Recently, I read an article by Capterra founders entitled: Why Raising Venture Capital Would Likely Have Killed Capterra. It made me reflect on my own personal experience while working at a bootstrapped company that has turned down venture capital.
Outside of the operational reasons for pursuing investment (e.g., infrastructure, R&D, hiring, etc.), one of the things that rarely gets discussed are the signals (e.g., marketing, PR, market credibility, brand image, etc.) associated with taking investment.
Being one of the only major players (in our industry) that is completely founder-funded, here are a few of the challenges we have run into, the tactics we’ve used to tackle them and how we’ve found success bootstrapping in a venture capital world:
Challenge 1: Securing meaningful press coverage.
Journalists rarely care about covering product updates in the B2B space. But can you really blame them? Is it all that interesting to read about a marketing automation platform’s new feature for Twitter? Not at all, not even a little bit.
Strangely, journalists still haven’t abandoned writing articles focused on investment rounds, which oftentimes are incredibly boring and don’t provide a compelling, worthwhile read. If anything, funding should be a footnote in a story about the exponential results that a round later enabled.
Yet, it still gets covered anyway and often produces the biggest wave of PR for a company for that entire year. This is simply the reality that many bootstrapped companies must learn to adapt to and compete with today.
Solution: Become a relevant source.
Enormous opportunity exists for companies and individuals that can make journalists’ lives easier by providing them with timely, interesting and relevant information that sparks ideas for new stories or adds depth to stories that are already in the works.
By offering data from our platform, expert opinions, different industry perspectives and new story ideas, we’ve been able to secure coverage in top-tier publications without having to pay for it. The trick has been to understand what value we can provide, and then personally engaging with journalists through channels such as HARO (Help a Reporter Out), email, Twitter and in the comment sections of their articles.
However, it is important to note that this cannot be a selfish, impersonal exercise. To really do it effectively, you have to put in the time, effort and care to get to know what these journalists write about, comment about their work and follow up with what you can bring to the table for future stories.
Challenge 2: Improving analyst relations and coverage.
When it comes to selling to the enterprise, analysts at major firms like Forrester, Gartner and IDC have significant authority over the evaluation and purchasing processes for B2B technology.
Building a relationship with an analyst takes time, and sometimes a great deal of money. Making the investment to become a client with a major firm, which often amounts to a mid-level employee’s annual salary, is a much more difficult decision for a bootstrapped company than for a company that has accepted funding. Even if they are a client, there isn’t (or shouldn’t be) a guarantee that analysts will write about a company.
In addition, some analysts will see not taking capital as an immediate weakness or the company as not being large enough to be included in industry reports.
Solution: Deliver unprecedented value.
While we were initially dissuaded by the immediate, up-front ask for tens of thousands of dollars, we eventually learned that you can in fact build a meaningful relationship without paying for it.
By connecting analysts with clients they can interview, sending them new reports, making them aware of big client acquisitions and providing opinions on the future of the industry, we’ve found that you can deliver enough value so that analysts will often include you in relevant discussions, reports and surveys.
Although analysts are still incredibly important, particularly when selling to enterprise level companies, major analyst firms are no longer the only sources of industry, category and product insights. Independent B2B software review sites like G2 Crowd and TrustRadius are quickly proving to be a hugely disruptive force in how software purchasing decisions have traditionally been informed.
These sites have truly leveled the playing field. These platforms help bootstrapped companies compete based on what actual users are saying about their software, which fortunately for us, is very positive. Because of this, we’ve seen an immediate impact from these reviews and even hear them come up during demos.
Challenge 3: Establishing credibility.
Whether it’s with analysts, potential clients or potential partners, not being backed by venture capital often raises eyebrows. Why?
An analyst in the text analytics industry probably summed it up best when he said, “Investment activity indicates the viability of the company’s technology and business model and the talent of its staff.”
True, not all of the people we come across think this way, but a surprising number do.
Beyond the assumptions of individuals, one of the strangest situations we’ve run into in terms of establishing credibility is keeping a Wikipedia page alive. Wikipedia requires that a company be what they consider notable, which as they define means that, “objective evidence that the subject has received significant attention from independent sources to support a claim of notability.”
The kicker? The only sources of notability for the majority of our competitors are the articles covering their investment rounds.
Solution: Sell to your strengths.
Obviously you can’t convince everyone or always overcome deeply held beliefs. However, we often draw on the fact that we have been around nearly a decade, are profitable and have high customer satisfaction scores. We’re also able to draw on experiences others have had with big-name vendors that have been acquired and then ceased innovating or updating their product.
From our experience, offering the security that we will not be pressured by investors to sell the business also goes a long way towards providing peace of mind to potential clients that have been burned in the past. Beyond this, having a list of clients who are willing to talk about their experiences can go miles at overcoming doubts.
Accepting venture capital investment often makes it easier to secure coverage, build rapport with analysts and establish credibility. However, all of these things are within the grasp of bootstrapped organizations willing to learn from those who have been there before and put forth their own concerted effort.
It will take time, and you will fail many times before you find success, but if you’re bootstrapping already, you probably possess the grit and sheer determination necessary to keep pushing forward and make things happen.
Above all, focus on delivering extraordinary value and keeping your clients as happy as possible. With the new tide of independent feedback from individual users of B2B software platforms, the buyer journey for business technology is changing and that publicly available feedback may soon be the most important market signal associated with your company.
This article has been edited and condensed.
Rion Martin is the marketing director of Infegy, provider of social media intelligence technology for marketing and research professionals. In this role, he is responsible for developing and leading Infegy’s global marketing program to boost brand awareness and market share, working closely with ad agencies, market researchers, and consumer insight teams. He also curates the Infegy blog and manages all content marketing initiatives. Connect with @infegy on Twitter.
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