When it comes to bootstrapping, many Atlanta startups know that route like the back of their hand.
With limited seed and Series A funding in the local community, several companies have turned toward bootstrapping, making Atlanta home to some of the fastest growing bootstrapping companies in the country. According to a survey with Mainsail Partners, half the Atlanta companies surveyed reported revenue growth of over 40 percent --- that's compared to 28 percent growth across the nation. Atlanta startups also reported growing profits, with 90 percent reporting breakeven or positive EBITDA (compared to 79 percent overall).
“Atlanta is becoming a tech hub, with more talent and investors coming in," the survey found.
So what does it mean to be an Atlanta bootstrapping startup?
Sifted, a female-owned bootstrapped company based in Atlanta, eases the stress of catering lunch in the workplace by providing corporate catering and lunch delivery. Co-founder Kimberly Lexow said she and co-founder Jess Legge constantly found themselves left without food during catered meals or seeing their friend who was responsible for coordinating the meals scramble to book lunches at their former workplace. Now, Sifted caters to brands such as Eventbrite, Uber, Google and Lyft in six different cities without raising traditional funding or debt, and have a team of 160 employees and year-over-year revenue growth.
"When Jess and I started the company, we were really interested in doing something that was sellable immediately," Lexow said of bootstrapping.
Becoming profitable immediately allowed them the freedom to make decisions in their own office, without the restrictions of investors.
"We don’t have to build a presentation ... We really do the analysis together [and] make great decisions," she said. "When we started the company, we wanted the business to be highly personal, [and this is] exactly the vision that we had."
When asked what advice she would give to other entrepreneurs considering bootstrapping, Lexow said it's important to create something at a small scale and sell it at a small scale, even if your initial idea is far bigger.
"This was definitely the right decision for us, we decided to really go for it," she said. "[Bootstrapping] offers a different way of running a high growth startup."
Though Sifted has never been against an investment, the choice of an investor is less about the capital and more who the partner would be, Lexow said.
"What I would love to see in Atlanta is more diversity in terms of the types of businesses that are funded," she said of the ecosystem. "Being able to find that and investors that match your needs in your own geographic area or the area where you're headquartered."
Bernard Parks, founder and CEO of startup TommyRun, an on-demand delivery platform for building and construction materials, said he raised a round of funding from friends and family, which gave him the confidence in his business to keep going. The company has recently expanded its services to Austin and was even offered to relocate to Birmingham.
"I did speak with people, but what I found is when it comes down to raising capital it’s really about relationships and unfortunately, there aren’t a lot of strong relationships when it comes down to funding in the African American community so it’s just a void in the market that I’m in," he said.
When it comes down to it, Parks said, there's a lack of funding in the market.
"I think it’s a combination of how you want to build your company so once you have the confidence, you have a business model you can build on, then the question is do you wait for funding or do you prove out your business model and start forming your company independently?" he said. "I chose to go ahead and grow my company, because I though the only thing that could happen to me is that I learned more or that I’d be more prepared and determined."
Bootstrapping, Parks admits, is hard, but he's learned a lot since joining the Techstars program. His biggest piece of advice to those with an entrepreneurial background is to take advantage of bootstrapping, value your business and and be honest with yourself. Technology, he said, is not more than just problem-solving and the question is how much of a problem is it and based off of that you know how much someone would pay for it.
"Take advantage of [bootstrapping], that’s your real learning curve, because everyone is just moving around an idea," he said. "The knowledge that you were able to learn and gain, making those adjustments, no matter how much money someone has, they won’t be able to catch up to that. That piece of knowledge is your advantage," he said.
