For the last decade, scoring a big round of venture capital funding has been the yardstick of success for startups across the ecosystem. After that, startups can finally get out of fundraising mode, focus on growth, reach scale and generate millions (billions?) in annual cash flows. But for many startups, venture funding isn’t necessarily the best option — for some, it’s no longer an option at all.
Now, with global venture funding in decline, bootstrapping is an increasingly important and viable way to launch and grow a startup.
Moreover, it seems like the pendulum has swung back to a time when technical innovation (as opposed to business model innovation or regulatory arbitrage) is happening in nascent spaces such as crypto, climate and generative AI. Venture capitalists may feel reluctant to invest in companies without a product they can prove is already successful with a growing customer base.
Founders of consumer tech startups can use the current market downturn as an opportunity to focus on revenue generation by building products that customers are willing to pay for.
We launched NordVPN from Lithuania in 2012. Back then, there was a lack of accessible venture capital — that year, Baltic startups merely raised $54.4 million combined compared with $2.4 billion in 2021 — which we had to factor into our corporate growth plans.
Here are three key principles bootstrapped founders should keep in mind for conceiving, launching and scaling a successful consumer product, based on our ten years of bootstrapping experience.
Double down on a key focus and do it well
When your customer is king, it usually pays to develop product thinking, which is the skill of knowing what makes a product useful to — and loved by — people. But what happens when you are building a product for a market segment that doesn’t even exist?
Use the current market downturn as an opportunity to focus on revenue generation by building products that customers are willing to pay for.
The answer: double down on a key product focus rather than explore multiple options — do one thing very well (at least initially). Your attention to detail will become a competitive advantage in time.
In the early 2000s, VPNs were mostly associated with businesses and the public sector. Consumer VPN technology was still nascent and the average online user was not familiar with it. In short, there was a lot of white space to be filled.
In 2012, it was important for us to educate people on the importance of using a VPN and why they should pay for one — and it was equally important to build a product that the ordinary internet user could, and should, use daily (addressing both functional and emotional needs).
The huge vacuum in the consumer VPN market at that point meant it was tempting to ship out any and all features, especially since the industry was still maturing then. However, our limited capital meant we had laser focus on revenue generation, which meant building a product our users loved. By prioritizing control, convenience and speed, our customer loyalty was built up over time and retention remained high in both the good and hard times.
You don’t need VC to develop a consumer tech product by Walter Thompson originally published on TechCrunch
https://techcrunch.com/2023/07/10/you-dont-need-vc-to-develop-a-consumer-tech-product/
