Entrepreneurship without raising money or building 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 multimillion-dollar fundraising… And who are beginning to be courted by investment funds.

“Success isn’t measured by whether or not you’ve raised money. Sometimes it is necessary, sometimes not. † Timothée Rambaud, calm and pragmatic, 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. Nearly incongruous at a time when every fundraiser is being relayed by the press and the barometers are multiplying: in 2017, for example, women raised 142.5 million euros, according to KPMG, and 1.5 billion for all start-ups, according to Capgemini and eCap- partners. ‘It’s a bit of a race to see who will lift the most’summarizes the entrepreneur.

Since 2014, LegalStart offers a tool to manage all administrative aspects of your company 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 of the foundations. The start-up started by tackling one problem and another. And continues to bring new bricks to its offerings today as partnerships are forged and customers come in. Don’t spend what you don’t have and don’t do what you can’t. Bootstrapping, a technique that Leonid Gonchavrov, the creator of Anticafé, knows well.

find customers

Another decisive element to move forward without lifting is the meeting between the product and its customers. As with LegalStart, which quickly attracted paying users, the Do You Dream Up start-up attracted its first major account, EDF. “After that everything went very quickly”, says Cyril Texier, co-founder of the structure that specializes in creating chatbots. With its two partners, they believe that the revenue generated thanks to the customers would allow them to recruit and grow. Properly speaking, the company now works with 60% of the Cac 40 and achieved a growth of 130% in 2017.

“Before showing our product, we spent 24 months research and development, without paying ourselves,” adds Cyril Texier. This is also the key for these companies: launching with a solid offer to present. But this requires months of R&D, a team, even a small team, and therefore money (at least a little). The most common scenario is neo-entrepreneurs putting 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. He spends this amount on setting up his company. After merging with Cherche cours, the site of Yann Léguillon, Superprof has 3 million turnover, 10 million users in 22 countries, employs 44 employees and is proud to be profitable in France, the flagship deploying international makes possible.

Banks only lend to the rich

In addition to personal investments, start-ups have the opportunity to receive grants, state support (bpifrance), regions or incubators that will take them from the idea to the launch of the project. ‘Cause oh surprise, Banks only lend to the rich believes Cyril Texier of Do You Dream Up. “In 2014-2015, five years after launch, we obtained a zero rate loan from bpifrance and a loan from a bank. Until then, we were on equity. † After all, in order to borrow, a company must be able to justify its last three activities, which is impossible for a start-up company under construction.

“If you don’t have money, you have to use your imagination to negotiate and convince”, adds Wilfried Garnier, who has been denied several loan applications. Not having money entails a certain discipline on a daily basis. “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 confidence in the future that did not stop the founder of Superprof from “Get startled by seeing accounts in the red regularly”

“Money for money is not interesting”

Room for maneuver sometimes limited by lack of money, incremental growth, patience and cold sweats, why do these entrepreneurs persist without raising money? A matter of time, they explain. But above all a question of mentality: Timothée, Wilfried and Cyril, say that they “focus” on the product, its development, its improvement. They say they don’t have time to look for investors.

So it’s a matter of freedom. And meaning, finally. “Money for the money is not interesting”, notes Timothée Rambaud. “Before considering a fundraiser, the company should set itself a goal: fundraising should be a lever for growth and we need to be sure of that because the capital is diluting. † Capital loss for the founders and possible losses according to the entrepreneur who underlines that: “If a company is not doing well, the fund always has priority. It was infuriating that the founders spent years building their business.”

For Timothée Rambaud, who has also been on the side of investors, sometimes young companies focus too much on increasing, at the expense of the product, forgetting the issues of dilution, possible failure… He especially warns entrepreneurs to save the money to manage a fundraiser. “Be careful not to burn too much money. Chaining tricks can be a dangerous game. †

Alignment of planets

Without being totally resistant to lifting, the interviewed entrepreneurs expect “an alignment of the planets” before signing with investors. Cyril Texier would consider an exemption if these three boxes were checked: “the feeling, because it is identical to a marriage, the sharing of the vision and the issue of dilution. † The same observation at LegalStart, which only aims to abolish 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 by funds because they know if we are still around it is because our business model is sound and our team is managing growth well”, assures Timothée Rambaud. Ditto with Cyril Texier, who receives proposals every week. For the time being, the entrepreneur and his employees are discovering the world of investment funds, looking and learning. “If we do a fundraiser tomorrow or join forces with a tech player, it’s going to be to accelerate, to go international, something we’re not doing right now, so as not to crash. † So leverage or no leverage? That is the question. Meanwhile, the Do You Dream Up co-founder assures “manners like a good father”

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

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