Obtaining financial backing for expansion is a crucial obstacle for new businesses, which operate in an extremely fast-paced environment. Several early-stage businesses frequently decide to pursue conventional funding strategies, such as soliciting investments from business angels, taking part in accelerator programs, or looking for venture capital (VC) funding. Even though these tactics are widely used, an increasing number of digital entrepreneurs are looking into other ways to drive the growth of their businesses. Crowdfunding and revenue-based finance are becoming more attractive choices for people who want to keep control of their businesses while expanding in a sustainable manner.
In this piece, we’re going to go into the topic of bootstrapping, which is a business model wherein businesses rely on their own resources and sales to drive development. We will investigate the unusual paths traveled by 10 European firms who made the decision to bootstrap their businesses first before perhaps looking for finance from other sources. These businesses have been able to defy the odds, put an emphasis on effectiveness, and forge their own way to the top.
Bootstrapping vs. Raising Venture Capital
It is essential to have a solid understanding of the fundamental differences between bootstrapping a business and getting venture money before delving into the narratives of these European firms that were self-funded.
The process of self-funding a company using one’s own personal funds, the income earned by the firm, or modest financing from other sources is known as “bootstrapping.” The founders of a bootstrapped firm keep complete control of the business and put their attention on organic expansion. Bootstrapping allows for greater independence as well as financial security, even if it may take longer to scale.
On the other side, raising venture money entails searching for investments from third parties, most frequently from individuals who specialize in venture capital. This path offers quick access to finance, but it typically ends in a loss of control as well as equity for the company. When a startup receives money from a venture capital firm, it is expected to see rapid and significant expansion within a very short period of time.
Now that we’ve got that out of the way, let’s take a look at 10 successful European firms that got their start through bootstrapping.
1. Ecosia: Planting Trees with Every Search
Ecosia is a search engine with the unusual purpose of combating climate change by planting trees. The company’s headquarters are in Berlin. In a manner analogous to that of traditional search engines, the company’s concept for doing business is centered on the sale of advertising space. Despite this, Ecosia places a greater emphasis on reforestation than it does on the development of profits. They used a socially responsible strategy, which helped them build a sustainable firm that has experienced consistent expansion. Notably, Ecosia has never held a large funding round, and the business’s founder even took efforts to turn it into a steward-owned company, which ensures the company’s continued dedication to minimizing its negative effects on the environment.
Ecosia is one of the greatest tree-planting groups in the world, with 15 million users as of the year 2021 and having planted more than 130 million trees around the globe.
2. Typeform: Elegant Surveys from Barcelona
Typeform is well-known for its sophisticated user experience and its user-friendly platform for the creation of interactive surveys and forms. The company’s headquarters are located in Barcelona. The firm was established in 2012, and its founders initially self-funded the initiative for a period of many years. Typeform’s success as one of the most renowned businesses to come from Barcelona was made possible by its bootstrapped beginning, which set the road for the company’s success. In the end, they were successful in raising around 42.9 million Euros (or USD) in finance from venture capitalists.
3. SumUp: Empowering Small Businesses
Small companies and merchants may benefit from SumUp’s mobile point-of-sale solutions and sales technologies, which are offered by the London-based firm SumUp, which is in the financial technology sector. It is possible that you have dealt with the technology developed by SumUp if you have ever paid for something at a restaurant or café using a card reader. SumUp was established in 2012 and its founders self-funded the company for a considerable amount of its early existence. SumUp has developed its business via both organic growth and six strategic acquisitions, and it is currently valued at EUR 26 billion.
4. Mojang Studios: The Creator of Minecraft
You may not be aware with Mojang Studios, but you surely are familiar with its most well-known product, which is known simply as Minecraft. The legendary game that has won the hearts of millions of people all around the world was developed by Mojang Studios, which was established in 2010 and has its headquarters in Stockholm. Before being acquired by Microsoft for 2.1 billion EUR, Mojang Studios relied on bootstrapping, demonstrating that inventiveness and enthusiasm can lead to exceptional results. Microsoft acquired Mojang Studios in 2014.
5. Web Summit: Europe’s Premier Tech Conference
Web Summit is now recognized as one of the most successful technology conference organizers in the world. The conference was first held in 2009. The annual Web Summit attracts over 100,000 attendees from more than 170 different countries, making it a key player in the sector of technology-focused conventions and conferences. Although it began as a local event in Dublin, it rapidly garnered appeal all over the world. Web Summit achieved success by its own efforts, and further development resulted from the organization’s expansion into North America and Asia.
6. Hotjar: Enhancing User Experience
Hotjar was established in 2014 and is a provider of solutions that aim to improve user experiences and facilitate user research. Hotjar has remained true to its bootstrapped beginnings while maintaining its reputation for being dedicated to the creation of a platform that is user-friendly. In spite of the fact that it is drawing potential investors, Hotjar continues to exercise fiscal restraint and caution with its money. Rather than offering dividends to shareholders, the company reinvests its profits back into the business.
7. Gymshark: Transforming the Fitness Industry
Ben Francis is the founder of the workout apparel business Gymshark, which was launched in 2012. Gymshark is sold only through online retailers. What started off as a side project in Francis’s mother’s garage and swiftly grew into a global fitness company is now known as Francis Fit. The phenomenal success and speedy expansion of Gymshark may be attributed, in large part, to the company’s use of influencer marketing. With profits that surpassed 295 million Euros in 2019, the company was recognized as the fastest-growing private corporation in the United Kingdom. Gymshark remained completely self-funded until the year 2020, when it sold a 21% interest at a valuation equal to that of a unicorn in order to largely escape the bootstrapping phase.
8. MessageBird: Omnichannel Communication
MessageBird is a cloud communications firm that was established in 2011 and has its headquarters in Amsterdam. The company’s mission is to simplify omnichannel communication between businesses and their respective consumers. MessageBird choose to operate through bootstrapping from 2011 to 2017, during which time the company remained profitable. They started looking for venture capital investment in 2016, and since then, they have raised more than 944 million euros in cash.
9. Culture Trip: Inspiring Travel Exploration
Culture Trip is an e-commerce business that was launched in 2011 and focuses on providing customers with travel-related material as well as the ability to schedule trips. Culture Trip began its existence as a remote business, and its first four years were spent using the bootstrapping technique. The creators tried out several techniques and conducted experiments, which ultimately led to spectacular viral development. Since that time, they have successfully received 87.5 million EUR in capital from investors, which has fueled their development to include over 300 staff in London, New York, Shanghai, and Tel Aviv, as well as the publication of over 80,000 pieces of content.
10. Loyal Guru: Enhancing Customer Interaction
On January 1, 2016, Loyal Guru was established as a company that provides a customer information platform that is powered by AI-based marketing automation. Loyal Guru placed a primary emphasis on developing a trustworthy relationship with their clientele since they were aware of the significance of developing a sturdy company strategy. Before seeking venture capital funding, the firm reached a profit for a period of two years. To this day, they have been successful in raising 2.3 million euros in financing, which has allowed for faster expansion throughout LATAM and Europe.
The Triumph of Bootstrapping
These 10 European firms are great instances of how bootstrapping can lead to exceptional success, and they can serve as inspiration for other entrepreneurs. These businesses have successfully avoided the conventional route of seeking finance from outside sources by placing an emphasis on effectiveness, retaining their concentration, and making effective use of their own resources. Although it involves patience and dedication, bootstrapping is advantageous for entrepreneurs since it gives them greater control over their company and encourages them to be self-sufficient.
In a world where startup tales are frequently dominated by external investments, these success stories of businesses that were self-funded by their founders serve as a reminder that there is more than one way to achieve greatness in the world of entrepreneurship. Each of these firms, from Ecosia’s efforts to reforest the world to Culture Trip’s motivational writing about travel, exemplifies the vast variety of options that become available to entrepreneurs when they take control of their own destinies. Although the process of operating on one’s own resources may be difficult, the outcomes may be remarkable.