Entrepreneurship without raising funds, or how to build a healthy business model

They decided to set up their business without raising money. Not out of an absolute thirst for independence, but because their economic model allowed it. Testimony of these entrepreneurs far from the limelight trained in multi-million fundraising … And who are starting to be courted by investment funds.

“Success is not measured by whether you have raised money or not. Sometimes it is necessary, sometimes not. » Calm and pragmatic, Timothée Rambaud knows both sides of the coin: after a career in finance first at Goldman Sachs and then in an investment fund, the 30-year-old launched his start-up in LegalTech with a former mining and a Harvard alumnus, without fundraising . Almost an incongruence at a time when every fundraising is being mediated by the press and the barometers are being multiplied: Thus, in 2017, women raised 142.5 million euros, according to KPMG, and 1.5 billion to all start-ups, according to Capgemini and eCap partners . “It’s a bit of a race over who lifts the most”sums up the entrepreneur.

Since 2014, LegalStart has offered a tool to manage all the administrative aspects of your business online, from direct debit to bankruptcy filing. “We had the choice not to raise”, emphasizes Timothée Rambaud. A choice made possible thanks to the decisions made by the funds. The startup started by tackling one problem, then another. And continues today to offer new bricks for its offering as partnerships are entered into and customers enter. Do not use what you do not have and do not do what you can not. Bootstrapping, a technique well known by Leonid Gonchavrov, the creator of Anticafé.

find customers

Another crucial element to move forward without lifting, the meeting between the product and its customers. As with LegalStart, which quickly gained paying users, the start-up Do You Dream Up attracted its first major account, EDF. “Afterwards, everything happened very quickly,” says Cyril Texier, co-founder of the structure specializing in the creation of chatbots. With his two partners, they believe that the income generated thanks to the customers would enable them to recruit and grow. Overall, the company now works with 60% of Cac 40 and recorded a growth of 130% in 2017.

“Before we showed our product, we did 24 months of research and development without paying ourselves,” adds Cyril Texier. This is also the key for these companies: to launch with a solid offering to present. But this requires months of R&D, a team, even a small one, and therefore money (at least a little). The most common scenario, new entrepreneurs inject their savings into the adventure. Wilfried Garnier, founder of Superprof, a platform he describes as “Airbnb private lesson”, had 30,000 euros in his bank account. This sum he devotes to the creation of his company. After merging with Cherche cours, Yann Léguillon’s website, Superprof accounts for 3 million revenue, 10 million users in 22 countries, employs 44 people and boasts of being profitable in France, the flagship that allows international implementation.

“Banks lend only to the rich”

In addition to personal investments, start-ups have the opportunity to receive grants, support from the state (bpifrance), regions or incubators, which allow them to go from idea to launch of the project. Because oh surprise, “Banks lend only to the rich” thinks Cyril Texier from Do You Dream Up. “We received a zero interest rate loan from bpifrance and a loan from a bank in 2014-2015, five years after the launch. Until then, we were on equity. » To borrow, a business must be able to justify its last three activities, impossible for a startup under construction.

“When you have no money, use your imagination to negotiate and convince”, adds Wilfried Garnier, who has had several loan applications rejected. On a daily basis, not having raised money evokes a certain discipline. “Every morning I look at the growth, because it is the only one that solves the problems. The more growth, the more I allow myself to spend. » A rhythm and a confidence in the future that does not prevent the founder of Superprof in “Give some scares by regularly seeing accounts in red”.

“Money for money is not interesting”

Room for maneuver sometimes limited by lack of cash, step-by-step growth, patience and cold sweat, why do these entrepreneurs continue without raising money? A matter of time, they explain. But above all a matter of mentality: Timothée, Wilfried and Cyril say they “focus” on the product, its development, its improvement. They say they do not have time to look for investors.

So a matter of freedom. And meaning, finally. “Money for the sake of money is not interesting”, notes Timothée Rambaud. “Before considering a fundraiser, the company must set a goal: Fundraising must be a lever for growth, and we must be sure of that, because it dilutes capital. » A decline in power to the founders and potential losses, according to the entrepreneur, emphasizing the fact that “When a company performs worse, it is always the foundation that prioritises. It’s annoying when the founders spent years building their business. ”

For Timothée Rambaud, who was also on the investor side, young companies sometimes focus too much on raising, damaging the product and forgetting the issues of dilution, potential failure … Above all, he warns entrepreneurs to manage the money from a fundraiser. “Be careful not to burn too much money off. It can be a dangerous game to chain tricks.”

Creation of planets

Without being totally resilient to lifting, the interviewed entrepreneurs expect “an adjustment of the planets” before signing with investors. Cyril Texier would consider a waiver if these three fields were checked: The feeling because it is identical with a marriage, sharing the vision and the issue of dilution. » Same observation at LegalStart, which only predicts a lift on the condition that “the investor brings knowledge of the market, customers or strategic support”.

However, the opportunities are not lacking. “Every week we are courted for funds because they know that if we are still there, it is because our business model is sound and our team manages growth well.”, assures Timothée Rambaud. Ditto with Cyril Texier receiving weekly suggestions. For now, the entrepreneur and his employees are discovering a world of mutual funds, watching, learning. “If we do a fundraiser tomorrow, or if we team up with a tech player, it will be to accelerate, to go international, something we are not doing at the moment, not to crash.” So, lever or no lever? That is the question. Meanwhile, the co-founder of Do You Dream Up is insuring “to manage like a good father”

Article published in the 4th edition of Forbes France, September-November 2018

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