For most people, the word bootstrap means a piece of leather that helps you put on your shoe. But for entrepreneurs, it’s also a method of self-funding a business to get it off the ground.
Akron startup Revenue Conduit is a great local example of a successfully “bootstrapped” business. Founders Daniel Kurt and Parag Jagdale launched the business in 2013 with nothing more than a good idea and $1,400 of their own money. Since then, they have connected with the larger network of entrepreneurial support resources all across Northeast Ohio and completed their first $1.5 million-plus fundraising round.
I recently had opportunity to catch up with Kurt and Jagdale and learn more about how Revenue Conduit came to life, and how they turned their self-funded project into a successful venture-backed startup.
The big idea
The duo met at the Ohio State University’s Business Builders Club in 2003 while doing their undergrad work. Although they were studying in very different fields (Kurt was a marketing major, and Jagdale was studying computer science), each had been bitten by the entrepreneurial bug. Jagdale was freelancing on the side of his day job in information technology, with the hope of eventually launching his own business. Meanwhile, Kurt was running an online jewelry business with his wife.
The idea that became Revenue Conduit spawned from one of Kurt’s major pain points as a small online retailer: the fact that he was spending entirely too much time connecting sales information from his e-commerce platform with his customer-relationship management software. When he teamed up with Jagdale, both quickly realized the potential of a system that automates this process. The rest is history.
Revenue Conduit might have been founded on a bootstrapped $1,400, but in less than two months the company had revenue-generating customers. After participating in two conferences, Revenue Conduit secured another 20 customers. By the end of 2013, Kurt and Jagdale were working full-time for the company.
According to Jagdale, the book “The Lean Startup” by Eric Ries was a big influence during this period. He attributes much of their rapid growth to sticking to the book’s fundamental principles of keeping costs low and focusing on getting a product to market.
“Release what you can release that can provide value and get some feedback,” he said. “Get to market ASAP, make money ASAP, focus on growing the business and getting paid. The rest will take care of itself.”
Finding more funding
As the company continued to grow, Kurt and Jagdale began to consider bringing in outside capital to scale faster. They decided to begin with the Great Lakes Innovation & Development Enterprise (GLIDE) Innovation Fund from the Lorain County Community College Foundation.
They chose this option because there were no real downsides to going through the process, even if they didn’t win funding. There are no fees to apply, the process put them in contact with many other potential investors and it forced them to distill their idea down to its essence and create a solid pitch presentation.
“Ultimately, the project they pitched was well put together, with meaningful, value-adding milestones to help them validate their business model and grow their customer base,” said Dennis Cocco, co-director at GLIDE and the Innovation Fund.
This funding served as the springboard for Revenue Conduit’s later round of equity-based fundraising, which included venture capital from JumpStart Inc., the Ohio TechAngel Fund and other investors.
“It’s exciting to see how far they have gotten with such little capital,” said JumpStart venture partner Jon Grimm, who first began working with Revenue Conduit when he was an entrepreneur-in-residence for the state’s Northeast Ohio Entrepreneurial Signature Program. “I am very eager to see what they can do with this infusion of capital.”
By developing their product in-house, keeping their costs low and, most importantly, solving a real problem in the market, Revenue Conduit has been able to stay lean and grow quickly at the same time. Today, it is are not only a startup success story, but also a great case study for other regional entrepreneurs who are considering bootstrapping their own businesses.
This post originally appeared in Crain’s Cleveland Business on May 4, 2017