As a CTO in a passionate and growing tech community, I’ve witnessed a variety of startups come and go. Here in Gainesville, a college town in Florida, there's a never-ending stream of ideas coming from the University of Florida and surrounding areas. Some work out as companies, some don’t.
Getting a company off the ground is an uphill battle, but tech-oriented projects tend to carry added expenses with hardware needs, software licensing, and the average salaries of STEM professionals. Often, funding these startups can be a challenge, especially early on before any investment or revenue.
I’ve seen a variety of creative ways to bootstrap a company, and I thought I'd share some of the more interesting ones. While these might not be a great fit for everyone, they might help you think of new ways to get started or keep your company funded.
Offer Self-Humiliation In Exchange For Donations
There is no reason not to try and have a little fun while raising capital. Fetchnotes co-founders Alex Schiff and Chase Lee promised a karaoke video, featuring their very own vocal stylings, to donors contributing $1 or more to their Gumroad campaign. TechCrunch tracked their fundraising progress, and at one point, the duo had saved eight months’ worth of server costs.
Fetchnotes went on to win a spot in Techstars, winning $18,000 upon acceptance and $425,000 in funding shortly thereafter. If nothing else, the karaoke stunt showed these 20-somethings had guts, and the campaign drummed up some nice PR.
Capitalize On Free Stuff, From Software To Student Interns
Restricting spending can be a means to raising funds. Estately CEO Galen Ward has raised a cool $1 million since his early frugal days of mooching server resources from other startups, accepting free meals, and leveraging free apps.
Recruit student interns to help control administrative pains, kickstart marketing, conduct sponsorship outreach, or trudge through research for free-to-you academic credits. Of course, realize that these students also come with zero experience. Zero-cost resources for startups are also available if you know where to look — from free website builders to application deployment and analytics tools.
Live In An RV And Rent Out Your Home
Kimberly Causey's story involved giving up her apartment, buying an RV, and going door to door peddling her home furnishings guide for nearly four years. Since her days of self-promoting on a measly, mobile budget, she’s appeared on The Today Show and her books are featured in Barnes & Noble.
If you’re a homeowner and the market’s in your favor, consider renting out your condo, townhouse, or single-family home while you’re living on four wheels. Owning rental properties can turn a nice side profit, and that could make for excellent startup seed money.
Use A Personal Loan Backed By A Solid Business Plan
Investing your own savings is one option for launching a business. Not everyone has the luxury to be in that financial position, though, and you may have to consider cutting back your lifestyle. Consider the startup story of Christian Chabot, Chris Stolte and Pat Hanrahan. The Tableau Software founders grew a $100 million business by foregoing salaries and making lifestyle changes — downsizing homes, cutting cable and slashing personal spending.
If you’re set on bootstrapping your business, but those adjustments aren’t for you (or aren’t enough to get where you need to be), another option is available. Various companies will loan you small amounts of money to help you get by, and securing a personal loan for business purposes is certainly possible.
The downside is that much like credit cards, personal loans come with APRs, and if you happen to be taking out a personal loan with a bad credit score, these APRs can be especially high. The upshot is that you’re still not bound to investor interests. Your borrowed funds are yours to spend as you see fit.
Take Advantage Of Server Discounts
It’s 2017. Aspiring business owners know they’ll need a website, but hosting expenses vary wildly depending on the market, expected traffic, compute needs, and other factors.
Steve’s Basement Custom-Printed T-shirt’s, for example, will do fine with a modest shared hosting account. Meanwhile, a record-breaking startup — the next DigitalOcean, Slack, Pinterest, or Cloudflare — will have a heftier hosting bill.
On average, the best web hosting providers cost $2 to $10 monthly for shared, $15 to $50 for VPS, and upward of $75 for dedicated hosting. Since many tech startup founders are in the market for the pricier virtual or dedicated servers, you should take advantage of server deals. Sites like DealCrunch offer curated Bluehost coupons, discounted rates for HostGator plans, and other promotions for providers.
Try Business Credit Card Churning
The grand finalé: By signing up with the right issuer at the right time and expensing the right things, you can use credit cards for your business funding. It starts with signup bonuses — $500 just for spending X amount in the first few months, for example. Many leading issuers offer 0% APR for up to a year or longer, and you can close the account before the higher APR kicks in.
Meanwhile, some of the best cash-back cards can mean thousands of dollars reinvested in your startup, and you can repeat the process with the next card. It’s what they call credit card churning. It takes attention to detail, not unlike launching a tech startup, but it’s the bootstrapper’s ultimate loophole.
Bootstrapping is certainly a great option to starting a company if you don’t need a huge amount of capital. You can’t beat the creative independence, and being the sole driver of your project feels pretty incredible. Self-funding options have doubled in the last decade, and more avenues will open up. It’s doable. You just have to be willing to put in the time, work hard, and believe in what you do.
