As UK angel startup investors doggedly continue their ingenious strategy of, ummm, not actually investing in startups, many UK entrepreneurs are having instead to follow what people such as Paul Grant promote as the “bootstrapping” path – for really, how far towards critical mass can you get your company using just ingenuity, oxygen, and the contents of your piggybank? Quite a long way is the answer.
However, the startup advisors and bloggers who happily suggest this don’t usually take into account the second part of the business equation: timing. You see, opportunity breaks down into three basic things – timing, money, and execution. Hence bootstrapping is built on the thinnest of notional sands: the false idea that opportunities are happy to sit around forever twiddling their thumbs while you’re slowly bootstrapping to try to take advantage of them.
What a load of nonsense!
Ideas change, technologies change, cultures change, markets change, policies change… everything changes. In fact, the speed of change is arguably trending faster all the time, making windows of opportunity narrow year-on-year.
It’s entirely true that successful startups have always had to be lean(-spirited) and mean(-fisted), but people who go around saying things like “startup costs are trending towards zero” (and I’ve been seeing this a lot over the last year or so) are helping to contribute to the converse of the equation – which is that without money, startup execution time trends past the ever-narrowing opportunity window.
I suspect that all this talk of bootstrapping has helped people to forget the whole point of angel investment – that it’s not there to build miserly and slowly, but to build economically and fast. It’s less about avoiding waste (although that’s always a help) than about reaching speed – it’s about (literally) capitalizing on opportunities, not bootstrapping past them.
In my last industry, big computer game development was largely crippled because the volatility of publishers was so great (and the contracts so one-sided) that developers had honestly no idea whether a given development title’s eventual publisher would even want a game in that genre. Here we have an analogous situation, in that UK angels’ analysis paralysis is now extending beyond the length of most opportunity windows – by the time they’ve managed to steel themselves for the trauma of writing a cheque, the chances are pretty high that whatever opportunity their investee company is aiming at has passed by.
Perhaps pivots are the natural reaction to this: is the real reason startups need to pivot so much because angelic indecision causes opportunities to be missed? How many startups get funded quickly enough to really hit the market they’re originally aiming at? Very few, I’d guess…
Funding Startups (& other impossibilities) 
Comments on: "The sucky Tao of bootstrapping…" (3)
Insightful and succinct as ever! Not sure I buy your argument that this is reason for pivots… but suspect that’s partly tongue in cheek 🙂
It’s not the only reason for pivots, for sure… but all the same, I suspect there’s a nasty interaction between angelic delay and opportunity loss which I’ll post more about soon…
[…] As with most complex systems, there’s no single reason for UK angel investing to have slowly died on its feet in the way that it clearly has. But there are some big trends at play, some of which I discussed in yesterday’s post on The sucky Tao of bootstrapping:- […]