The news is full of venture capitalists and angel investors showering startups with six- and seven-figure funding, but those deals are the exception, not the rule. Most entrepreneurs rely on savings or loans from family and friends to launch their companies on a shoestring.
Increasingly, entrepreneurs are bootstrapping their businesses using income from day jobs as startup capital. Sramana Mitra (pictured), author of Bootstrapping with a Paycheck, says there are definite advantages to starting slow and using the resources at hand.
“Over 99 percent of the businesses that go out to seek financing actually get rejected,” says Mitra. “A lot of that is for good reason.” VCs tend to be interested in businesses that have exponential growth curves, not the slow and steady growth that makes sense for many small businesses, she notes, adding: “In that reject pool, there are many viable businesses.”
In 2010, Mitra, an MIT graduate with startups and a consulting practice under her belt, founded One Million by One Million: 1M/1M, which she calls “the only virtual global [business] incubator in the world.” The curriculum is aimed at helping entrepreneurs in that “reject pool” succeed.
“We take pride in the fact that we do not reject anybody,” she says, as long as their business falls within the expertise of the incubator: technology and tech-based services, such as e-commerce and business outsourcing over the internet.
Compared to traditional incubators, Mitra says, “We support a much wider range of entrepreneurs.” The incubator offers a free public roundtable on the internet every Thursday except holidays. Entrepreneurs can sign up for a premium program at 1M/1M for ,000 a year, which includes private mentoring and additional training materials, as well as connections with a global network of potential customers, investors, media, and analysts. Unlike many incubators, 1M/1M doesn’t take equity in its client companies.
“Our goal is to help a million entrepreneurs reach million and beyond,” Mitra says. She sees this goal as achievable for entrepreneurs starting their business while still holding down a job working for someone else. “Bootstrapping using a paycheck is … slower because you are doing it nights and weekends,” she says. “What we’re trying to look for is more options for entrepreneurs to get their businesses off the ground.”
“The upside is the vastly lower level of risk,” Mitra notes. “There are people in the industry who believe that, unless you take huge levels of risk, you’re not going to make it big.” She doesn’t agree. “We have seen so many successes,” she says of lower-risk ventures. “It can be done very well.”
Mitra highlights the case of eClinicalWorks, whose founder and CEO Girish Navani bootstrapped his idea with his paycheck and never took any venture capital, according to Mitra. The company now has 0 million in annual sales and has made it into the “unicorn” club of tech companies valued at more than billion.
The founders of Tipsy Elves, started their company while working full time at professional jobs and generated 0,000 in sales while moonlighting at their business. “We call this [trend] ‘ultralight startups,’” Mitra says.
Entrepreneurs “have to feed their families and pay their bills,” says Mitra. Moonlighting at their own startups “gives people more options.”
Plus, it’s good for employers. Mitra notes that the entrepreneurs make good employees because they are leaders. “Employers are encouraging employees to be entrepreneurial,” she says. “In some cases, they are providing seed capital.”
The post Virtual Incubator Helps Entrepreneurs Moonlight at Their Startups appeared first on QuickBooks.