How Self-funding and Partnerships Accelerate Growth Beyond Investment and Bootstrapping
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The technology startup sector recently shone its spotlight on unicorn Canva’s latest capital raise. The attention again brought into focus the well-worn approach to funding growth: venture capital, successive capital raises, followed by acquisitions to boost revenue.
This approach is as familiar in Australia and in Asia as it is in Silicon Valley itself.
Canva’s success is not in doubt and should be applauded. However, there is an alternative approach to growth: a new, dual approach that encompasses self-funding, driven by early and sustained revenue, and partnerships with organizations that have market width and depth, that also become customers.
Partners as Customers
When partners become customers, it opens up a powerful marketing advantage through their validation, their deep knowledge, and a willingness to help co-develop and generate success.
Partnerships with technology companies are, of course, common. Less so is having the same companies as customers, users or clients. And this concept can apply equally to partner companies outside the technology space.
There are a number of advantages to this approach in your early days: you retain control of your own company, and maintain the original vision you had for it. Building revenue through add-on services funds product development, which helps spread risk. The partnerships you form become strategic, with a deeper commitment from both sides, and continue to broaden in scope over time. This allows you to consider the appropriate timing to seek additional external investment.
And choosing to generate and build customer and partner revenue from the outset creates a detailed understanding of their needs and pain points you are solving. These insights can be leveraged into product developments that answer their own needs, and those of other customers, creating better market fit and differentiation.
Here’s what’s on offer to any company seeking this joint partner/customer revenue model for growth:
- Acting as and for customers provides significant insights into how your products or services should be developed to answer real pain points, or to support real customer scenarios and contexts.
- By ensuring all customers have access to the same value, irrespective of business size, ensures an emphasis on creating easy user experiences and user interfaces—everyone must get value easily and quickly.
- By choosing to grow from revenue, you get close to your early customers, who help validate and strengthen your offering.
- Having more than one revenue stream allows a choice between offering added-value-services (for example, marketing services) and a self-service model in which users use a product or service themselves.
- By developing deep partnerships with the goal of partners becoming customers, collectively you can find new ways of going to market together, leveraging the strengths, and distribution and marketing channels, of each company.
As always, there is no single way to creating sustainable growth.