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The 1Mby1M Methodology is based on case studies. In this course, Sramana Mitra shares the tribal knowledge of tech entrepreneurs by giving students the rare seat at the table with the entrepreneurs, investors and thought leaders who provide the most instructive perspectives on how to build a thriving business. Through these conversations, students gain access to case studies exploring the alleys of entrepreneurship. Sramana’s synthesis of key learnings and incisive analysis add great depth to each discussion.
The 1Mby1M Methodology is based on case studies. In this course, Sramana Mitra shares the tribal knowledge of tech entrepreneurs by giving students the rare seat at the table with the entrepreneurs, investors and thought leaders who provide the most instructive perspectives on how to build a thriving business. Through these conversations, students gain access to case studies exploring the alleys of entrepreneurship. Sramana’s synthesis of key learnings and incisive analysis add great depth to each discussion.
Over the last decade and more, I’ve had the privilege of working with a large number of bootstrapped entrepreneurs. These include self-financed companies and also modestly capitalized startups that operate in a capital-efficient manner applying the principles of bootstrapping.
I’ve also interviewed hundreds of investors, especially micro-VCs and angels who are playing in the early stage game.
I’ve asked all of them the following questions:
The commercial Internet has now been around for almost 30 years. Lots of stuff has already been built. Nowadays, there aren’t so many wide open opportunities out there. But there are many, many niche opportunities.
Some of these businesses need to be built for very small amounts of capital: Invest $1-2M, and sell for $10-15M. Do you have an appetite for this type of investment?
What about a notch smaller? Invest $250k-$500k and sell for $5-$10M?
What about a notch larger? Invest $5-10M and sell for $50-$60M?
As I expected, a large number of investors are still chasing Unicorns. They are interested in investing in companies that will go from 0 to $100M in 5-7 years. And they will consume a great deal of capital in the quest of hitting the coveted billion dollar valuation mark.
However, I am pleased to report that I have spoken with a number of investors who recognize the niche opportunities and answer yes to my questions above.
Yes, they are interested in investing small amounts and harvesting through smaller exits.
In that strategy is the recognition that most acquisitions happen in the sub $50 million price-point.
Therefore, for all stakeholders to make money, a capital efficient strategy is required.
I’ve also spoken with a number of CEOs and Board Members of public and pre-IPO companies on what they want to acquire. While the larger companies need to acquire significant chunks of revenue, in the smaller companies ($100-$300M), often, there is a different issue. A $100M SaaS company, quite likely, is making most of its revenues from one product. To thrive as a public entity, it faces tremendous pressure to broaden its product line and find one or two additional $100-200M businesses.
How would they do that?
The market, of course, is full of heavily venture-funded SaaS startups with very high valuation expectations.
Most of these are not affordable for a small, recently public or pre-IPO company.
Instead, a small, capital-efficient startup that has shown product-market fit in a domain with strategic alignment is far more interesting as an acquisition target.
In any case, we will discuss the topic in a lot more detail in this course with extensive case studies illustrating both the investor perspective, the acquirer perspective - the buy side, and the entrepreneur perspective.
Let’s get started.
The 1Mby1M courses are all heavily based on interview-based case studies on Innovation, Business Models, Go To Market Strategies, Validation Principles, and various other nuances of an entrepreneur's journey. We offer extensive opportunities for entrepreneurs to learn the lessons from the trenches from successful entrepreneurs who have done it before and Investors who support their ambition. Exit is crucial to this innovation ecosystem, as large companies access new technologies and business models through acquisitions. We offer buy-side perspective through interviews with Corporate Development executives as well.
HyperTrack CEO Kashyap Deorah had early success with three of his companies, each of which had very small amounts of friends and family financing. He pretty much bootstrapped these three startups to rapid exits. His fourth startup, HyperTrack, has been a challenging journey, but he has navigated it well, and turned around the earlier setbacks over the last five years. Wonderful story.
Behamics CEO Valon Xhafa is a software developer who made a successful transition to an entrepreneur and had a quick exit with his first venture. His second venture is already at $5M+ in revenues with just a pre-seed round of financing. This venture, Behemics, has already received two acquisition offers. Fabulous story!
Autobia Co-founder Emad Daghreri bootstrapped his first company and took it public in the junior stock exchange in Saudi Arabia. He is now doing a second company. This interview focuses on his bootstrapping to exit story with the first one.
There are roll-ups of e-commerce brands going on right now. This case study delves into one such that has exited into a roll-up effort.
StoreConnect CEO Mikel Lindsaar has built a services company in Australia and spawned six SaaS products out of it. One of them, StoreConnect, is a terrific Bootstrapping by Piggybacking story on top of Salesforce.com. He has exited four of the apps, and expects to grow StoreConnect to $100M+ in revenue. Terrific story!
Stephanie Leffler, CEO of OneSpace, is a damn compelling entrepreneur. Stephanie bootstrapped her first company to $20 million in revenue from St. Louis. Her second, also from St. Louis, is venture-funded and crossed $10 million in revenue last year. Awesome entrepreneur, inspiring woman!
Deepak Balakrishna, Co-founder CEO of Adya, which was acquired by Qualys. We review his lessons from the trenches, steering a Bootstrapping to Exit transaction.
Abinash Saikia, Co-founder of EnCloudEn and former 1Mby1M Premium member, has successfully bootstrapped his venture to an exit and discusses the process in great depth.
Mitch Russo tells the story of how he built TimeSlips and sold it to Sage. Very entertaining as well as instructive.
CEO Dara Greaney bootstrapped BuyAutoParts.com to $54 million in profitable revenue and sold the company to private equity. Yet another story of success in the niche e-commerce domain.
It is so important not to lose sight of the capital-efficient, bootstrapped or minimally capitalized companies that have achieved success, provided significant return on investment to their stakeholders, and built value for their customers. Read VerticalResponse Founder Janine Popick’s wonderful story!
CEO Bhavin Turakhia and his brother Divyank have bootstrapped Directi, a portfolio of Internet businesses over the last ~20 years. In 2014, they had their first $160 million exit. In 2016, they had a second $900 million exit. It’s a very interesting story of masterful business acumen and disciplined fundamentals-driven execution. Not a penny of external financing involved, by the way.
When we spoke with Founder Mark Lancaster in 2014, very few technology companies had been built from the UK. ARM and Autonomy come to mind. Here’s the story of a company called SDL.
Steven Mitzenmacher, SVP of Corporate Development at Rackspace Technology, discusses the Buy-side thought process on Exit Strategy.
Seong Kim, Corporate Strategy & Development for Chegg Inc., discusses exit strategy within EdTech.
Seksom Suriyapa, Partner at Upfront Ventures, and formerly head of Corporate Development at Twitter, SuccessFactors, McAfee and Akamai. Seksom discusses exit strategy from the buy-side perspective at length.
Jukka Alanen, SVP of Strategy and Corporate Development at PagerDuty, discusses Exit Strategy.
Warren Weiss is Managing Partner at WestWave Capital. We had a terrific discussion on small exits as seen by a seasoned investor.
David Lambert, Managing Director at Right Side Capital Management, a firm that invests small chunks of capital in capital efficient ventures. The firm is very much in line with the Bootstrapping to Exit philosophy we’ve been discussing.
Sonali Vijayavargiya, Founder and Managing Partner at Augment Ventures, discusses her firm’s investment approach, including early exits.
Kyle Asman is Managing Director at Backswing Ventures, a firm that has a non-Unicorn investment thesis.
Shane Neman is Founder of EZ Texting, JoonBug.com, and Principal at Neman Ventures. Shane has bootstrapped two companies as a solo entrepreneur, found successful exits for both, and is now an investor. Needless to say, he has no bias against solopreneurs.
Here are some more Bootstrapping to Exit case studies well worth reading shared as external resources:
Bootstrapping to Exit: Imagine Easy Solutions CEO Neal Taparia
Bootstrapping to Exit in Israel: Eli Sasson, Founder of Minicom
Bootstrapping to $12M+, Getting Ready to Raise Money: MindTouch CEO Aaron Fulkerson
Creative Bootstrapping To A 350 Million Dollar Exit: Nimsoft CEO Gary Read
Investor Forum With Shane Neman, Principal at Neman Ventures
Please pick your favorite case studies from the course and run them through a validation and positioning exercise. Use the 1Mby1M Self-Assessment questionnaire and try to answer each question in it.
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