How to Bootstrap a Startup to Exit with Sramana Mitra

The 1Mby1M Methodology is based on case studies. In this course, Sramana Mitra shares the tribal knowledge of tech entrepreneurs by giving students the rare seat at the table with the entrepreneurs, investors and thought leaders who provide the most instructive perspectives on how to build a thriving business. Through these conversations, students gain access to case studies exploring the alleys of entrepreneurship. Sramana’s synthesis of key learnings and incisive analysis add great depth to each discussion.

Over the last decade and more, I’ve had the privilege of working with a large number of bootstrapped entrepreneurs. These include self-financed companies and also modestly capitalized startups that operate in a capital-efficient manner applying the principles of bootstrapping.

I’ve also interviewed hundreds of investors, especially micro-VCs and angels who are playing in the early stage game.

I’ve asked all of them the following questions:

The commercial Internet has now been around for almost 30 years. Lots of stuff has already been built. Nowadays, there aren’t so many wide open opportunities out there. But there are many, many niche opportunities.

Some of these businesses need to be built for very small amounts of capital: Invest $1-2M, and sell for $10-15M. Do you have an appetite for this type of investment?

What about a notch smaller? Invest $250k-$500k and sell for $5-$10M?

What about a notch larger? Invest $5-10M and sell for $50-$60M?

As I expected, a large number of investors are still chasing Unicorns. They are interested in investing in companies that will go from 0 to $100M in 5-7 years. And they will consume a great deal of capital in the quest of hitting the coveted billion dollar valuation mark.

However, I am pleased to report that I have spoken with a number of investors who recognize the niche opportunities and answer yes to my questions above.

Yes, they are interested in investing small amounts and harvesting through smaller exits.

In that strategy is the recognition that most acquisitions happen in the sub $50 million price-point.

Therefore, for all stakeholders to make money, a capital efficient strategy is required.

I’ve also spoken with a number of CEOs and Board Members of public and pre-IPO companies on what they want to acquire. While the larger companies need to acquire significant chunks of revenue, in the smaller companies ($100-$300M), often, there is a different issue. A $100M SaaS company, quite likely, is making most of its revenues from one product. To thrive as a public entity, it faces tremendous pressure to broaden its product line and find one or two additional $100-200M businesses.

How would they do that?

The market, of course, is full of heavily venture-funded SaaS startups with very high valuation expectations.

Most of these are not affordable for a small, recently public or pre-IPO company.

Instead, a small, capital-efficient startup that has shown product-market fit in a domain with strategic alignment is far more interesting as an acquisition target.

In any case, we will discuss the topic in a lot more detail in this course with extensive case studies illustrating both the investor perspective, the acquirer perspective - the buy side, and the entrepreneur perspective.

Let’s get started!

The 1Mby1M courses are all heavily based on interview-based case studies on Innovation, Business Models, Go To Market Strategies, Validation Principles, and various other nuances of an entrepreneur's journey. We offer extensive opportunities for entrepreneurs to learn the lessons from the trenches from successful entrepreneurs who have done it before and Investors who support their ambition. Exit is crucial to this innovation ecosystem, as large companies access new technologies and business models through acquisitions. We offer buy-side perspective through interviews with Corporate Development executives as well.