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Do I aim for investment or bootstrap?

I've developed an assessment, care planning and outcome monitoring tool for children in public care. Its seen as the "gold standard" for the sector by a few key players, but isn't widely known yet. I currently have a working prototype, one significant customer up and running and two smaller customers in the process of signing up, without ever having done any marketing. I'm in the UK, so this is partly a public sector market (of statutory health and social care organisations) and partly smaller private providers (companies that run children's homes, or support foster families). Competition is very limited, and the rules for running children's homes have just changed in my favour, requiring evidence of progress which I would argue necessitates outcome measurement, so I'd like to seize the market niche.

However, at the moment it is just me (I'm a Clinical Psychologist), with a bit of admin support and a programmer I pay by the hour, and I am unsure of what to prioritise in taking it forward.

Do I:

1) bootstrap it myself, by continuing to put in my own time for nothing and paying the programmer per hour, and creeping forward one customer at a time, using the income from each to improve our offering, retaining all the equity
2) take on a salaried sales person to promote the product to try to earn enough from sales to polish the product, whilst retaining all the equity
3) try to earn small grants to gather evidence of efficacy and normative data, as this will make me more confident in marketing the product (although this will take time)
4) or do I seek funding to scale it up immediately to seize the market niche, and use the funding to take on all the skills I don't have as quickly as possible?

If the answer is 4, then I'm also torn whether to seek social impact style investments, because the product is much needed and will improve the lives of vulnerable children, or whether to look for more traditional investment? My company is not registered as a non-profit, so there are no legal restrictions (though I do also own a separate social enterprise company to provide low cost therapy to those who can't access it on the NHS). I am not sure that traditional investors would see the speed and scale of return as sufficient, unless they felt there was value in contributing to something worthwhile, as the plan is not to float the company or sell out in the foreseeable future. (I think we'd need ?300k of investment to be able to give this our best shot; total market capitalisation in the UK would lead to ?5M/year of subscriptions, so to exceed that we'd need to look abroad, but my current aim is to reach one tenth of that within 3 years).

6 Replies

Todd Kovalsky
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Todd Kovalsky Entrepreneur
I help businesses get where they need to go
I would suggest trying to bootstrap it yourself. Consider reading the lean startup by Eric Reis and rework by 37 signals. Until you have paying customers you may be spending money for no reason. I am doing the same and am learning to code in the process. Best part luck.
Ismail Berkan
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Ismail Berkan Entrepreneur
Lean Innovation Consultant | Digital Strategy & Transformation Advisor | Startup Mentor & Coach
Sell first, build later. Always go lean and agile. Don't hire professionals early on without validating your business idea and having paying customers. As @ToddKovalsky suggested, try to bootstrap as much as you can.
Miriam Silver
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Miriam Silver Entrepreneur
Consultant Clinical Psychologist / Director, LifePsychol
Thanks. I think sales are going to be key unless I pull in investment. Customers are fairly small in number but high in value. Current subscription is worth ?12k/year, and the two in the pipeline about ?3k each, but both have additional consulting and training, meaning I've been able to give up my other work to only do that (plus unrelated training), and I will soon need additional clinicians to help with the consulting and delivery.
Abdullah Almefdaa
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Abdullah Almefdaa Entrepreneur
CEO @ Gulf Cloud Corp.
I Concur with bootstrap the project and suggest looking for government backed soft loans in the UK like SBA in the US https://www.sba.gov/ or Kafala Program in Saudi Arabia http://www.alahli.com/en-us/business-banking/SMEs/Pages/Kafala.aspx
John Seiffer
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John Seiffer Advisor
Business Advisor to growing companies
Bootstrap!! If you go route #4 your job will change from selling product to selling the company (because this is the way investors get their money back). No only does this mean you'll be working for them (even if they don't own more than half the company - the terms of their deals will require it) but it's much harder to do than just selling product. I say this having been an investor and run and investor group.

So as a VC said, if you raise money when you shouldn't lots of things that otherwise would be good are now bad.

And many investors will be skittish about you doing additional consulting and training (because these things don't scale as well as tech). So if you take investment you'll be forced to do things that would make a whole lot of sense and money if you bootstrap.

PLUS you'll be able to grow slower if you bootstrap and learn a lot more about how to really serve your customer base. The discipline of getting people to pay you, focusing on cash in the door and how to use it best, and a whole lot of other things is the way to go for most companies. The vast majority by far.

BOOTSTRAP.
Zvi Goldstein, CFA
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0
Senior Quantitative Analyst | Data Scientist
It's going to be number 3 for sure. First, because it's free money. Second, because if you can't demonstrate efficacy, you're dead in the water. Funding the project yourself is not going to work, because it probably costs much more than you imagine. You're going to have a long trip ahead of you getting government approval, so the option of a quick launch is unrealistic. If you have a few patents or some kind of protect-able IP, some scarce skill-set, or have made significant and costly progress, you can court pharma companies and try to get them to buy you out or partner with you to develop the product. z
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