2016 seemed like a bloodbath for the Indian start-up ecosystem. More than 200 start-ups, including some of the biggest funded ones like AskMe, TinyOwl, Peppertap, FranklyMe and Fashionara, failed to survive the headwinds of competition compared to 140 the previous year, according to data from Tracxn.
The funding for start-ups also dropped by 50% this year to $3.8 billion as compared to $7.6 billion last year as investors turn cautious and keep a hold on the purse strings.
With funding drying up, the Indian startup scene is now looking to consolidate. Even large hedge funds have disappeared from the scene: There have been only 10 deals involving hedge funds in the first three quarters of 2016, compared to 50 deals in the same period last year, according to a study by the tech industry think tank iSPIRT and advisory firm Signal Hill.
But, do start-ups really need to focus on funding to survive or successfully start a business? Most start-ups are launched with $10,000 or less, according to a Wells Fargo/Gallup study.
Some of the most successful companies such as Github, Gawker, Dell, Hewlett-Packard, Apple, Microsoft, TechCrunch, Craigslist, who now reap billions of dollars in revenue started off with $1,000 or less.
With such an A-list of companies, it is a wonder that start-up founders don’t consider bootstrapping as an alternative way of funding, as it helps to focus on profitability and financial discipline along with the freedom to pursue one’s direction while largely maintaining control.
Here are a few key reasons why bootstrapping is a viable alternative
Constant focus on the cash flow: According to a study by CB Insights, 29% of startups failed because they ran out of cash; and how to spend the money they…