Raising funds is probably the most important consideration for bootstrapped businesses looking to scale.
When should I raise? What type of funding suits us best? Who should I approach? And how much should I target? These are all questions flashing through the minds of founders at one point or another.
Atom Learning, second on our sister publication BusinessCloud’s EdTech 50 ranking this year, is the UK’s largest EdTech platform for Key Stage 2 students.
Founded in 2018 by Alex Hatvany and Jake O’Keeffe, the platform helps over 90,000 primary school children improve their learning and prepare for secondary school entrance exams.
After bootstrapping for over three years, Atom raised $25 million from SoftBank – the largest Series A round ever secured by a UK-based EdTech platform.
“There is no ‘right’ way to finance and scale a business,” the founders tell TechBlast. “Thanks to the huge number of column inches that VC investments attract, it can be easy to think that venture capital is the only way to get a tech business off the ground. But that isn’t the case.
“At Atom, we got started by bootstrapping and spent the first three years focusing on becoming profitable before we even considered external investment. When we did look to the markets for financial backing, we were in a very strong position to raise on our terms.
“We had confidence in our business model, having spent years refining it, and being profitable meant that we weren’t under any time pressure.
“Bootstrapping first meant we could stay in control, take our time, and raise capital when it would have the most impact, rather than when we were running out of runway.”
It can be easy to get spooked into raising too early if you see competitors pulling in the big bucks, they add. “If this happens, hold your nerve. If you’ve got a clear strategy and have confidence in the plan, stick to it,” is the advice.
“Don’t get sidetracked by the decisions of others. The process of raising VC investment is unique to each and every startup that goes through it, so getting distracted by the decisions of competitors isn’t helpful. Keep your eyes looking ahead.”
Handing over equity in your business is a big deal, especially if you’ve spent several years holding all the cards.
So it’s vital that you make sure you’re bringing in the right investors when you do decide to raise.
“The best investors are those who bring more than capital to the table. A good VC can be a vital and valuable source of business advice, a talent scout, a connector to sales leads. They play an active role in your growth,” say Hatvany and O’Keeffe.
“The right investor will also believe in you and your vision for the business. This means they need to align with your vision. If an investor’s term sheet comes with conditions that make you feel ethically or professionally compromised, they aren’t the right partner to bring onto your cap table.”
Finally, it is important to have a plan for the money. “It sounds simple, but have a clear post-investment strategy locked in before you head out onto the investment circuit.
“This includes knowing how much you want to raise, how the post-raise scaling will be handled, how you’ll fill your talent pipeline, and what your immediate and long-term priorities are.
“A big injection of capital can destabilise a business unless there are plans in place to keep the ship steady. Make sure you have one.”
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