50 great companies that started with little or no money

NewsJuly 10, 2019Fundraising isn't the only way to succeed. These companies have proven it by generating impressive revenues with very small initial outlays.SHAREREPORT AN ERRORSAVE PDF / EXPORTStartup founders are widely believed that raising funds is a precursor to success. It is true that it is a common denominator for the most successful technology startups, but it is not a prerequisite, especially for the launch of the young shoot.

Entrepreneurs can prove themselves with little or no capital. Capital does not make funded founders more insightful than non-funded ones. If someone can't creatively turn a euro into 10 euros, why do you expect them to be able to convert a million into ten million?

To help illustrate how businesses can get started without raising capital, we've collected over 50 examples of businesses that started with a few thousand dollars, or with equity, to become examples of what we call "the effective entrepreneurship.

Many of these companies have subsequently been valued in excess of $1 billion. Some even have multi-billion dollar revenues, but none started with a lot of money. A high percentage of these startups raised funds from venture capitalists, but only after they had established that their success would come. Even now, many of them are not widely known – they are the invisible unicorns of technology.

So before you jump into planning meetings with investors, read these stories. They provide a counterbalance to many founders' perspectives on venture capital and offer other ways to think about funding. Taking on venture capital should be a choice, not a constraint.

Identify a need, then ask for money

You don't need to raise money to start if you can solve a real problem for customers and ask for money for it. Here are three ways to get there:

Automate your workflow

The easiest way to create a useful product is to automate part of your day-to-day workflow, to ensure that demand for your product is established and that you have a pre-existing source of funding.

MailChimp : In 2000, co-founder/CEO Ben Chestnut ran a design consulting business and had a stream of clients who wanted to create newsletters. The only problem was that they hated designing them. So, to spare his team that, he decided to create a tool that would simplify the process and MailChimp, a $400 million company, was born.

Lynda : In the late 90s, Lynda Weinman was teaching web design, but the technical books she gave her class were bland. So she started producing training films for her students. Over the next two decades, she built a library of content large enough to prompt Linkedin to shell out $1.5 billion to acquire the company.

PluralSight : Like Lynda.com, PluralSight offers remote software training. It is nine years old and offers more than 6000 courses. It should soon be introduced on the stock market around the billion dollars.

Start with a low capital cost product

Rather than trying to compete with a company like Apple, these start-ups have taken to selling low-cost products online and created multimillion-dollar businesses.

AdaFruit Industries : Limor Fried started her DIY e-commerce empire as a student at MIT by assembling DIY kits made from commercially available parts. Fried sold the same basic parts found in electronics stores, but also created original content that made it possible to solder on a replica of a Space Invaders. It now has 85 employees and earns $33 million a year.

SparkFun : Similar to AdaFruit, Nathan Seidle started Sparkfun from his dorm by selling electronics kits and components to engineers. Today, his e-commerce empire employs over 150 people and generates $32 million in revenue annually.

Old problem + Existing business model + New technology = €€€

Solving an old problem with new technology can be enough to create a multi-billion dollar business.

Shopify : The founders of Shopify were looking for a shopping cart solution while launching an e-commerce site for snowboarders. Unable to find one, they brainstormed and came up with a tailor-made solution. It turned out to be the perfect fit for many more people, and the founders ran the business independently for six years with the revenue generated. They eventually raised funds from VCs and then went public, at a valuation of $14 billion.

Braintree Payments : Exchanging money online, without getting ripped off by fraudsters, is one of the web's oldest problems. Braintree has developed a higher quality technology solution that can act as a buying office for buyers and sellers. It lived on for four years off the deals before raising $69 million in two rounds of funding that preceded an $800 million sale.

Do what you know how to do

Many entrepreneurs waste their time “playing CEO,” strategizing, and laying out a dream flowchart for what their business could become. The best founders avoid daydreaming and focus on what can be done using only the resources at their disposal.

SimpliSafe : People scoff at the idea of ​​trying to start a hardware business, but SimpliSafe's Chad Laurans did it. He raised a small amount of money from family and friends, then spent eight years building a do-it-yourself security company, literally soldering the first prototypes himself to save money. Eight years later, the company has hundreds of thousands of customers, hundreds of millions in revenue, and $57 million in venture capital from Sequoia.

Ipsy : Birchbox floated the idea of ​​sending sample boxes of cosmetics to potential customers, but YouTube star Michelle Phan tapped into her online stardom to turn her into a phenomenon. His audience and relationships with cosmetics brands enabled him to create a new box of products sent to his subscribers generating $150 million in revenue before raising $100 million.

ShutterStock : Jon Oringer was a professional software developer and amateur photographer. He combined these two skills and used 30,000 photos from his personal photo library to create a two billion dollar image storage service.

Quizlet : Quizlet may not be the biggest company on this list, but it was founded by a 15-year-old. By the time Quizlet achieved a Series A in 2012, it was led by a 22-year-old CEO, had 40 million users, and was among the top 50 websites in the United States.

Skyscanner : The company started out as a bespoke spreadsheet to help its founder find the best prices for a flight. It has since become Edinburgh's leading technology company with over 500 employees. The company was launched on its own in 2001, raised $6 million in 2007 and $192 million in 2016, fifteen years after its launch.

Take the money where you can

Funding does not always manifest itself in millions of euros brought in at once. Founders can raise money from grants, incubators and business angels, or even presales. The savviest entrepreneurs design their business model such that they collect payments before delivering their products, turning customers into a source of growth capital.

CoolMiniOrNot : CoolMiniOrNot started as a website where geeks could show off their ability to paint Dungeons & Dragons miniatures. Eventually, the site's founders decided to design and distribute their own games. They ran 21 Kickstarter campaigns that raised $20,644,352 million in non-dilutive funds.

The Wirecutter : Who said blogs don't pay? Founded by a former Gizmodo editor, Wirecutter implemented deeper and fairer reviews, paired with Amazon affiliate streams, and the self-funded startup was eventually rewarded with a $30 million sale .

To sell ! To sell ! To sell !

The best source of capital is… a customer! In addition, the sale has two advantages. First, you ring the cash register immediately. Second, you quickly learn what resonates with customers and can use that information to refine your offer.

RXBar : When one of the entrepreneurs behind RXBar shared his ambitious business plan with his father, the families' father asked his founding son to stop theorizing and start pounding the pavement: "You have to stop what you are doing and sell 1000 cereal bars. That advice, plus $10,000 in savings, turned into $600 million, the price Kellogs bought out the startup.

LootCrate : LootCrate had over 600,000 customers who purchased their pop culture samples and generated $100 million in revenue before raising institutional capital. Their effectiveness is due in part to the fact that the company began charging customers on the first weekend.

Klaviyo : The co-founders of Klaviyo have agreed to defer their first hire until they have an ARR (Annual Recurring Revenue) of $1 million. Thanks to careful product design and a tireless sales effort, the emerging email marketing platform quickly surpassed that figure, but it delayed fundraising for three years.

Spanx : Sara Blakely turned a $5,000 investment into an Oprah-endorsed garment that generated $400 million in annual revenue. His fashion sense won him a following, but his deep understanding of capital efficiency principles earned Blakely billionaire status.

Tuft & Needle : Despite a competitor raising 3,994,900% more capital, this mattress startup was able to surpass $100 million in sales thanks to earnings and just $6,000 in seed capital.

Grammarly : Spell checkers have been included with Word and Google Docs for more than 10 years, but Grammarly has made enough improvements to be able to charge over 800 universities and hundreds of thousands of writers a monthly fee for spell checkers. overcome grammatical faux pas. After nearly a decade of searching for typos, the company has won a $110 million Series A.

Be stingy with marketing

Marketing startups might not want to waste their time with immeasurable brand marketing. Effective entrepreneurs need immediately complementary campaigns.

ButcherBox : In a world where box lunch companies struggle in the public market, ButcherBox, the leading online seller of grass-fed beef, has thrived, earning up to $1 million a week leapfrogging expensive advertising channels and developing effective relationships with influencers.

Cards Against Humanity : With just $15,700 in funding from Kickstarter, the Cards Against Humanity team created a business that grossed over $12 million in its first year. They also backed their brand with a series of shrewd marketing stunts by cutting up a Picasso, digging a big hole representing the boredom of a post-Trump America, selling Trump “bug out” bags, and simply asking to the money. A good way to interest the media.

GoFundMe : Viral marketing can be a powerful driver when properly integrated into the product. Combined with extremely effective conversion rate optimization, it can be unbeatable. The founders of GoFundMe were able to use both of these strengths to seed a business to the point of valuing it at around $600 million.

Efficiency > capital

Startups are often valued by how much they've raised, but it's more important to consider how they spend. The best entrepreneurs orient their businesses around an inherently more efficient technology or business model for capital multiplication.

PaintNite : The idea of ​​combining Monet and Merlot is not new, but the founders of PaintNite wanted to make the model more profitable. While their competitors relied on a slow and expensive franchise sales model, PaintNite paired art teachers with existing bars wanting to sell wine on weekdays and created a $30 million business. dollars the previous year.

Tough Mudder : Will Dean, a running entrepreneur, turned his $7,000 savings into a business with over $100 million in annual revenue. The secret was to pre-sell race entries and then use those funds as working capital to build the electrified obstacle courses that made Tough Mudder a global phenomenon.

Build a community

Technology matters and business models matter, but building a group of passionate users is key.

37 Signals/Basecamp : The maker of project management tools doesn't disclose revenue, but founder Jason Fried said the company generates "tens of millions in annual profits." They were also one of the first voices to champion capital efficiency.

Mojang : The Minecraft Masons never raised any funds, employed only 50 people, and made nearly a billion dollars in profit before selling to Microsoft. The Swedish studio has never gotten caught up in fads like Zynga-inspired social spam and predatory microtransactions. Minecraft grew by charging users a flat fee, resulting in a $2.5 billion acquisition.

Behance : Scott Belsky started Behance for five years in the creative community before raising $6.5 million from Union Square Ventures. This acquisition was ultimately completed for $150 million.

Craigslist : Craigslist has turned an early launch of the first internet communication boom into a long-term sustainable advantage. Despite only having 40 employees and not updating the site substantially for decades, Craigslist is the seventeenth most visited site in the United States and is said to have generated hundreds of millions of profits.

Plenty of Fish : The dating site was founded in 2003 and barely changed in functionality or aesthetics over the next decade. As with Craigslist, Plenty of Fish's main asset was its reputation as a well-stocked pond. Ultimately, the company sold for $575 million.

Fortune favors the “boring”

Boring is not a value judgment. Many of the most impressive and successful businesses that have managed to grow without capital have thrived on solving specific, if somewhat “boring” problems, and getting paid easily from the start.

SurveyMonkey was founded in the dotcom bubble of the 90s, and while it wasn't as disruptive as its peers, like Kosmo, it was more enduring. It survived the dot-com crash and gradually reached a nine-figure growth rate, raising just $100 million eleven years after its launch.

Protolabs does for plastic injection molding what Vistaprint does for business cards and is currently worth $1.2 billion.

Cvent , worth $1.65 billion, builds event management tools, and Textura , acquired for $663 million, handles construction management — which isn't generally considered a deal-breaker. fashionable or trendy.

Grasshopper is a telephone network company that has 150,000 customers, annual revenue of over $30 million, but has no VC, and was eventually acquired by Citrix.

eClinicalWorks was founded in 1999, back when the mantra was "Get big fast" and many of its contemporaries crashed and burned. By focusing on the tedious but profitable work of clinical data management, the company has survived and now employs over 4,000 people and generates annual revenue of $320 million.

Datto : Founded in 2007 and managing $80,000 in credit card debt, this new data storage company, valued at over $1 billion, is the only Connecticut-based unicorn.

InsideSales.com : Launched in 2004 with a $10,000 investment, the provider of artificial intelligence services to the inside sales team has grown to 570 employees. He waited eight years to close his first $4 million round in 2012 and has raised over a quarter of a billion dollars to date.

JetBrains : A Prague-based developer of leading JAVA IDE editor and programming language Kotlin has a list of 230,000 paying customers, enrolls 431 Fortune 500 customers, and employs 691 people — all without risk capital.

Unity has become one of the mainstays of the mobile game industry by focusing on all non-game development aspects, such as cross-platform compatibility and "bump mapping". They went years without raising capital, but now have a valuation of over $1.5 billion.

Qualtrics started as a tool to administer surveys for schools and businesses in a Utah basement and now employs 1,000 people and makes $100 million a year, profitably.

Wistia : Corporate training videos are famously boring, the only thing that could be more boring is a startup dedicated to hosting them. Despite a lackluster market like dinner plates, Wistia has managed to build a team of 80 people serving 300,000 customers, including Starbucks.

You can always fundraise later

Wayfair : The e-commerce home goods company was profitable in its first month of operation and grew profitably for a decade, until it eventually collected a Series A – from a worth $165 million – shortly before going public. The company is currently worth $6 billion and, since they have suffered little dilution, the founders are worth a billion dollars each!

Zip Recruiter : "We started with modest ambitions: to start a lifestyle-focused business," co-founder/CEO Ian Siegel said in an interview with Forbes. Those ambitions were met, and as the recruiting platform continued to grow, the founders decided to raise a Series A of $63 million to tackle bigger plans.

Nerdwallet : The personal finance service that promises to help young people save money has lived on a tight budget from its inception in 2009 until it raised $64 million in 2015. The company conducted an assessment of $500 million based on more than $100 million in annual revenue, although he recently had to tighten his belt with a small layoff.

Blessed are the “unfunded”

The advantage of starting a business outside of a startup hub is that there aren't many VCs available. It may seem like a curse, but it can be a blessing in disguise. Unable to dream of raising funds, entrepreneurs are forced to make their paying customers happy.

Atlassian : Australia-based Atlassian has reached a market capitalization of $13 billion, but had it had easier access to funding, the team might have sought out low-quality growth before finding the way to act effectively.

Campaign Monitor : When a company's first funding looks more like an IPO, you know you're dealing with successful entrepreneurs. Such is the case with Campaign Monitor, a young Sydney-based startup that offers superior email analytics tools to companies such as Disney, Coca-Cola and Buzzfeed and whose first funding reached $250 million. .

The Trade Desk : With a unique vision of how to energize the programmatic advertising industry, founder Jeff Green launched The Trade Desk at the end of the modern AdTech funding cycle. This overcapitalization of the market, combined with the burn of investors by poor returns, made every round of financing difficult, throughout the life of the company. Green was an accomplished startup CEO, who raised just $26.4 million in venture capital in the company's first six years and turned it into a billion-dollar business traded on the NASDAQ.

Don't design your business for investors

Startups used to come up with solutions and then ask for money. Today they are asking for money to solve the problem. Outside of drug discovery or aeronautical hardware, this decision is usually a bad one. Making progress without resources is the best way to get VCs interested.

Remember, you don't need a dime to get started. You don't need permission from VCs to create and scale a startup. So the next time an investor tells you they're "passing," remember these three principles:

Find the original post (in English) on Medium. Translation by Antoine Garbay