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Adii Pienaar

Now working on Receiptful. Co-Founder & ex-CEO of WooThemes. Author of Brandiing. New Dad. Ex-Rockstar.

Why A Bootstrapper Raised Venture Capital

I started working on Receiptful in May last year and never considered that a year later I’d have a team, a product without revenue (but with a lot of traction) and would’ve just announced the closing of our seed round.<...>

Why not? Because bootstrapping has always been such a big part of my entrepreneurial journey to date.

Not only that either; whilst I’d like to think that I’ve always had an open-mind about venture funding versus bootstrapping, there’s no doubt that I’ve always firmly preferred and promoted the latter.

This contradiction was jokingly pointed out by one of our first committed investors (Vinny Lingham) within the first minute of our initial call. And rightly so; I seem to have always taken it upon myself to emphasise the alternative route when Vinny would be quoted in (local) media about venture funding.

Knowing that this was going to be the case, I was actually quite sensitive of what my friends (and those individuals that follow my writing) would say about this U-turn on my semi-aggressive, "bootstrap-at-all-costs" stance. It’s on this backdrop though, that a close friend challenged me to write this in an effort to share my considerations.

1. Bootstrapping The Start

I mentioned this in the very first paragraph: raising venture capital wasn’t part of the initial plan for Receiptful. In fact, everything I did initially was 100% geared towards building a bootstrapped, self-funded product and startup.

My first steps in May last year was to publish a landing page, get interested parties to sign up and start talking to them about the hypothetical value proposition of Receiptful.

Thereafter I outsourced the build of a very crude MVP, which I tested with a handful of customers. The MVP was built exclusively for Stripe, which created some challenges and ultimately meant that we had to pivot away from Stripe. What it did though was it gave me valuable insight and created quite a bit of interest in the product.

That interest turned into putting a small, full-time team together in September and a rewrite of what we had to focus on out-of-box integrations for WooCommerce and Shopify (instead of Stripe).

The next 6 months were completely bootstrapped and self-funded, which helped us to acquire 3000 users and send more than 100k receipts by the time we closed our seed round (late-March).

2. Optimizing For The Idea

In perfect markets, one can build innovative products that addresses customers’ needs, charge fair value for it and ”Voila! You have take-off.”.

This wasn’t the case for Receiptful.

On the surface, the early iterations of Receiptful had two challenges in this sense:

  1. It’s less of a painkiller and more of a vitamin.
  2. There’s nothing like Receiptful in the marketplace, which means we’re exclusively responsible to create our own social proof, data and credibility.

Beyond this though, I knew from very early on that we were onto something; but it took us about 3 weeks (after launch) to see the first data that shows that we can generate additional revenue for customers via their receipts.

I also knew though that we still had a lot of learning left to do, as we’d only scratched the surface of what was possible via our receipts. This would take time and was at odds of trying to monetise Receiptful right away, so we prioritised customer acquisition, data collection and learning (instead of revenue).

This also aligns well with our long-term strategic roadmap, where we have a couple of crazier ideas that we’d like to build towards and explore, which means that bringing venture investors on board was a decision of optimising for this idea.

I don’t think it would’ve been completely impossible to bootstrap Receiptful, but it would’ve changed our roadmap completely and would probably have excluded us from any opportunity to explore our crazy, big vision stuff.

3. Finding Balance

I’m a firm believer that bootstrapping is much more of a discipline than just a source of funding. It’s with that mindset that I set out to raise Receiptful’s seed round.

This mindset has already influenced the early days of Receiptful in two big ways:

  1. If we wanted, we could’ve raised more money. The size of our seed round was however a deliberate decision to not take too much money, where things would become easy or comfortable. Instead I invite a bit of the “we-only-have-x-months-of-runway”-pressure, because that’s what invokes (provokes?) my entrepreneurial, survival instinct.
  2. Everything we do is down to a cost-benefit analysis, where the focus is very narrow: How can we get the maximum output with the minimum input?. This is engrained within our DNA and will be the way that we continue to work regardless of our existing (or future) funding.

This is about crafting a hybrid that tries to borrow from the best of both worlds. Bootstrapping and venture capital will never form a perfect marriage, but it’s a relationship where one could cover the other’s weaknesses (and vice versa).

4. A different kind of validation

I can remember the time I made my first sale online. It was exhilarating and addictive. In fact, it was so addictive, that whilst I was at WooThemes, I’d refresh my browser multiple times a day to see an updated revenue dashboard.

It wasn’t about the money or the absolute value thereof, but knowing that you’re working on something for which someone else is willing to pay, is an awesome feeling. It’s also validation that you’re doing most things right.

I experienced a similar kind of feeling and emotion whilst raising Receiptful’s seed round; instead of pursuing revenue though, I was pitching investors and chasing after a ”yes”.

What I didn’t know was that this was validation in a whole different way and that it would outrank any prior experience I had in earning money online. Here I was interacting with incredibly successful individuals, whom I admire and respect, and then they say that they believe so much in me and my team that they’re willing to invest their money to help me build Receiptful.

This became such an adrenaline rush for me and it really built a lot of momentum in my head and heart about what we’re doing with Receiptful. Getting this support and validation from entrepreneurs that had been there and done that is an incredible feeling. Whilst it doesn’t replace our (eventual) pursuit of revenue, I suspect I’m going to find future funding rounds similarly exciting and stimulating.

5. Embarking on an adventure

I’ve always been intrigued by the possibility of raising venture capital for a future venture, but (if I’m honest) I never thought that I would actually do it. That said, if you asked me to write down my entrepreneurial bucket list, raising venture capital would’ve been one of the first items on the list.

I have often written here about how challenges motivate me and how I’d like to make new mistakes whilst taking on new challenges.

I decided to move on from WooThemes specifically because I wanted a new challenge. I wanted to create something new and from scratch. I wanted to build a SaaS company and I had a particular intrigue to do so within eCommerce (which would double down on my previous experience and connections). Raising venture capital is just another one of those new challenges.

Adventure and uncertainty scares me. But it also makes me feel alive. It’s the only way that I know how to be an entrepreneur; I need to put myself out there beyond my own comfort zones.

This is just my adventure. :)

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