Often these days, one of the most crucial things on many entrepreneurs' mind is getting funded. Either angel funding, a loan, or VC funding, it is one of the things that are usually considered when a company has set up its base and the founders want to go about creating a business plan that not only reaches a certain aspect of scalability, but also nurtures growth in terms of real value.
Generally when it's a product startup, unless you have started shipping, your revenues would really take some time to come. Scalabiltity is certainly something that is dependent on how much and how quickly a product ships. However, things differ if you are a service-based startup. Depending on what service you are offering, it may change the perspective on funding and raising capital for your business.
Today, I take a look at one such service startup from Hyderabad, called iGenero. It started its work way back in 2009 and has been bootstrapped up until now. It's certainly making some great designs for a lot of small businesses in India, and yet giving a lot of major technology & design companies a run for their money if you look at the company's art.
In a startup that deals with providing important business functions, a lot of resources are all about talent and creating art for clients day in day out. So even though the infrastructure cost and talent hiring may not be the most difficult thing, it is a challenge to start your business without any funding and keep it that way for four long years. This is especially so if you are in the technology space where seeking external funding is so tempting, especially when there's overzealous flurry of growth within the Indian startup circuit.
Yet there are some companies which have held their high ground and kept doing work at a pace where their focus is on creating great value for clients and solving their real business problems. Here, the innovation is in pure design and of course usability. Which matters a lot to most brands in today's day and age.
iGenero was founded in 2009 by Aditya Gupta and Karan S. Kumar, surpirisingly without really much planning and any meticulous approach of setting up a business and relying on funds either from a VC, angel or even family support or any sort of loans.
The founders started shipping right from the get-go. In fact, as mentioned in this Postnoon article their company was registered as a partnership firm in May 2009 with the advance they got from their first client. And their perseverance and harwork have paid off. As mentioned in the article and my own conversation with co-founder Aditya, iGenero achieved INR 10 lakh (US$18,414) revenue in the first year of its operations, and it is growing at around 100 to 150 percent year-on-year in terms of revenues and clients.
So yes, bootstrapped and still going strong for four years is really interesting but iGenero isn't just about creating Web sites for businesses. What caught my eye was how it went from just a Web design startup, and scaled and expanded to provide consulting on brand positioning, brand concept building, and creating corporate identities along with creating digital branding for brand providing resources on digital brand positioning, user engagement strategy, content creation, and social platforms and applications.
With a multitude of services, iGenero has gone beyond just providing Web site design to really creating end-to-end services and providing real value that helps brands not only create an identity on the Internet, but to also engage its audience and generally ensuring various businesses get their money's worth from investing time and money in Web engagement and engaging users on social Web.
It has a multitude of clients including small and big businesses the likes of TimesJobs.com, Seagram's, Intellecap, and The George Washington University. Despite being bootsrapped, iGenero deviced a way to ensure it keeps shipping and reinnovating.
I had a chance to speak to Aditya Gupta when he was in Mumbai for a meetup. Here are some questions I posed in an e-mail and his replies:
Q: How did iGenero come to existence?
Aditya: iGenero came into existence because of multiple reasons. I was working at a tech startup for about six months or so, and so was my partner Karan. I decided to move on wanting to do something on my own. Karan burnt his hands at his first job and was scouting for opportunities. We came together with the belief we could make a difference to the industry and do better work than the guys who were already present in the industry. We started up in January 2009.
What are your core services, do you plan to go into building products?
As of now, we are into Web and mobile app development, branding and design, communication and strategy, as well as digital marketing. We have also been working on a product idea over the past six months and if all goes according to plan, should be live by the end of the year.
Why did you decide to stay bootstrapped and not go for funding?
For a plain simple reason, we didn't believe we needed funding in the initial stages of the company as we are in the service industry.
Have you never tried to seek investment? Have there been any negotiations?
We haven't actively pursued any investment opportunities yet. We did have a couple of acquisition and investment opportunities in the past which didn't materialize as we were looking to associate with the right kind of people, with a similar vision as ours, and not just do it for the money.
What key things would you say are required to succeed in a startup, especially one that's bootstrapped for this long.
There a few things that we have learnt along the way. These are not hard and fast rules but definitely help along the way.
Keep your overheads low.
Try and create a cyclical of cash flow. For instance, work in such a way that you would look at getting all your pending payments in by the last week if you plan to spend more in the first week. Bootstrapping is pretty much about maintaining a positive cash flow when needed.
- Account for your taxes. Having money in the bank is not the same as having money in hand. Always keep in mind there is a certain percentage that needs to be filed for tax.
- Trust your team. Being a small team in a startup, there is always a casual and friendly atmosphere. Be transparent and honest with them in good times and bad. Trust them and they will stick with you through tough times.
What kind of clients do you serve? I noticed most seem to be small businesses. Does that work better for you?
It's not a conscious decision to serve small businesses, but yes it seems to have worked out that way. The number of small businesses in India as a whole is on an exponential rise, and they are organizations as well as people that are ready to adapt to the latest in technology and marketing to make things work for them. I guess this phenomenon reflects in our clientele as well.
That said, we have also worked with quite a few national and international brands and organizations. There is no single thing that works better, but probably a combination of the two seems to be direction we have taken.
What are your major costs? How do you balance these?
Our major cost centers on a monthly basis usually are manpower and office infrastructure. There is no question of balance as these are costs that are mandatory and essential to our survival. We just need to make it happen.
How big is your team? Hiring people while being bootstrapped, is this a financial constraint?
We are a team of about 10 now. It's not about being bootstrapped but I guess we face the same problem that startups everywhere face when it comes to attracting, recruiting, and retaining high-level talent. Potential candidates' apprehensions range from pay scale, to not wanting to work in a small team, to having Saturdays off. It depends from person to person. The only probable constraint that comes out of bootstrapping could be the fact that we cannot afford to recruit in hordes and then sieve out the bad ones. It's too much pressure on our finances.
Any plans on going in for funding or expanding further?
Expansion definitely is the way forward for us, but how we do it is something we are working out ourselves. Yes, funding is definitely a valid option but it's not something we want to jump into right away. I think we first need to take baby steps in the funding arena and figure out the best match for us. There are many other options to consider in terms of expansions as well.
Disclosure: I was previously associated with Social Samosa, a social media publishing Web site and startup, which was designed by iGenero.