Bootstrap or fundraise for a 2 year old startup? We’re a 2-yr old ecommerce startup, raised a small round ($270K) to launch, had decent 1-year results, but were not sustainable & felt we should have stronger metrics before raising more. Tried bootstrapping & failed, as we manufacture ourselves and it’s expensive. Now we’re in a worse position to fundraise (less runway, lower sales numbers). But there is strong customer engagement & repeat buying. What would be our best strategy to escape this “pinch” and start growing? Should we just put all our energy into fundraising and raise what we need to grow?

Answered by Meeta Malhotra

I think you may have answered your own question, Saba. If you are out of runway, then the only thing to do is to put all your energy behind fund-raising.

Recognise that you will be doing this in a difficult environment.  Make sure that your ‘credibility metrics’ don’t slip. Fix targets for a few key metrics based on your business strengths – cohorts, DAU, conversion, etc. Then assign someone the responsibility of monitoring and meeting these, while you focus on investors.

Understand what you are selling and approach the right kind of investor. You mention ‘manufacturing yourself.’  I don’t know enough, but this could indicate that you will not scale quickly. If true, think about how you will compensate for this in your pitch.

If you have a great product, customer love and a path to profitability, you have a business. Don’t let anyone tell you otherwise. After that, it is only a question of what your ambition is. Good luck!