Bootstrapping: How to sell without a product

Raising funds is an important task for a Startup founder - ultimately, it's your job to keep the lights on. But raising funds externally, such as from VCs, angels or banks is not always the best approach. Depending on your stage in the  journey, other means might be preferable. Especially in the beginning, "bootstrapping" is a valuable option.

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In this article, I show how we have bootstrapped Stagecast in the beginning and how bootstrapping can work to propel your early company to the next stage.

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1. Bootstrapping Stagecast

Investopedia defines bootstrapping as "a situation in which an entrepreneur starts a company with little capital, relying on money other than outside investments."

That's exactly what we did in the beginning of Stagecast - while we still built version 1 of the solution, we obviously had no product to generate revenue from. Hence, we had to come up with alternative to generate revenue.

We came up with LiveHacks - a hackathon event where we invited a number of developers to work on challenges provided by Stagecast as well as sponsoring corporations. Later we also accepted consulting projects to fund our business.

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About LiveHacks

Live Hacks was a hackathon event for software developers (“Coders”), graphic designers (“Designers”) and electrical engineers (“Makers”) who came together in Stockholm, Sweden. LiveHacks was a networking event that felt like a music festival - a place where enthusiastic students and professionals met corporations. 

LiveHacks offered a chance to not only connect with the startup scene of Stockholm, it also served as an employee branding, talent acquisition and knowledge exchange platform. For corporations, engaging with the participants at such an event enabled having conversations and building relationships with potential future employees, customers or partners. Participants enjoyed a day of creating, learning, networking and play.

Participants were provided with “client challenges” from corporations, they could choose from a catalogue of "Stagecast challenges" or come up with their own challenge. Participants then usually went through an entire development cycle in only one day: From ideation to development and live testing. After the hackathon projects had the potential to be further developed by the respective corporations or Stagecast in collaboration with the participants. 

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LiveHacks enabled Stagecast not only to generate revenue to develop our main product, it also enabled us to test new concepts, attract talent and build relationships with corporations that later became customers & partners. Therefore, LiveHacks was a perfect bootstrapping tool.

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Generating revenue with LiveHacks

We had different commercial packages for participating sponsors. Corporations were able to choose from small, medium and large packages. The higher the package they chose, the more value we provided - for example, small sponsors were only shown with their logo in the venue, while large sponsors were able to provide a hack challenge to participants and give a speech during half-time break.

On average, a hackathon event generated between 200.000 SEK in revenue for Stagecast.

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Aftermovie of one of our first LiveHacks event

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2. How to find the right bootstrapping approach for your business

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Just because we created an event series, does not mean creating an event series is the right bootstrapping tool for your business. A good bootstrapping tool is one that has synergy effects - creating value for the company in more than one dimension. As described above, LiveHacks helped Stagecast generate revenue and it also helped us to attract talent, build relationships with corporates and test some of our product ideas.

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My advice is to think about what your business needs most to make it to the next stage.

Is it talent? Then start building and monetising a community - create a podcast, write a book, make a youtube channel, publish a blog or host an event series.

Is it user feedback? Start offering an alternative service that brings you closer to your clients - for example, start an agency or consultancy that specialises in the industry you are trying to penetrate.

Or hardware components? Consider building a drop-shipping business with a simplified version of your product that helps you build expertise and create relationships with suppliers.

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The one-and-only "perfect" bootstrapping tool does not exist. It depends on the company you are building and what brings your company to the next stage.

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