Trend Spotting: Serial Entrepreneurs Are Self-Financing Ventures

As you know, we have an extensive coverage of entrepreneurs and their business strategies on the 1Mby1M blog. This coverage has been going on since 2006, so today, this is where you will find the most comprehensive selection of entrepreneur case studies.

This steadfast tracking of entrepreneurship gives us a unique view into the trends shaping our industry. One of them, and I have noticed this trend developing over a period of time now, not just in 2013, is that serial entrepreneurs with success under their belts are self-financing companies a lot more than they did before.

Our recent story, Bootstrapping an App to $10M in Revenue: Christophe Bach, CEO of TextMe, highlights this trend in yet another wonderful case study.

TextMe is Christophe’s third venture. He and his cofounder put in $1M into the company, and has raised no outside financing thus far. The company has monetized its free TextMe communication app right from the get go, and is now doing $10M in profitable revenue.

I love the story, because it is perfectly aligned with our philosophy: entrepreneurs should work hard so that the negotiating leverage in fund-raising is with them, not with investors.

Of course, what drives this trend is that it is much cheaper now to build a company. TextMe has only 12 employees, and with that, they have scaled to $10M. Lean startup at its best, I would say.

And, hold your breath, they achieved this amazing feat in less than two years.

I believe, this trend is here to stay.

Of course, $1M is not an insignificant amount of capital, and unless you’re a successful serial entrepreneur team, you cannot pull this kind of money together from your own resources. However, a small friends-and-family round of financing, or even an angel round can provide just enough capital such that you won’t need to raise gobs of venture capital to scale a business.

And once you have found the inflection point, if it makes sense, you can raise a larger VC round with minimum dilution, maximum negotiating leverage.

This segment is a part in the series : Trend Spotting