When it comes to funding, there's the age-old question of whether to bootstrap SaaS or raise venture capital.
But did you know that
And while there are many ways to bootstrap SaaS, most people can only think about 2. Having it as a side project or using their own savings.
That’s why, in this blog post, we’ll explore other non-typical ways to gather the funds to help your SaaS take off the ground.
So, let’s talk about how to get those $$$.
Using Crowdfunding Platforms to Bootstrap SaaS
Crowdfunding has become much more popular and commonplace than it was years ago.
Before, it was only used for niche physical products that took lots of time and resources to build. Now, there are many other platforms out there with different categories. Not just physical products but also digital novels, online games, and indie films.
You can start small by going the micro SaaS route and create a product that addresses a specific problem for a particular niche. Or, you can create a software product and then transition it to a full fledged SaaS.
There are many different platforms you can use to sell your idea to potential backers and early adopters. The usual Saaspects (see what I did there?) are Kickstarter and Indiegogo. But there are others like Gofundme or Fundly.
You can give people exclusive perks like a direct line of communication with you, a say in the form of the final product, access to a lifetime plan or limited time offer and so on.
The key here is creating a story around the development of the product and helping people get involved in it. Instead of just stating what it does, what problems it solves, and how much is going to cost.
If you leverage the power of crowdfunding in an effective way, you can create buzz around the product, a community of early supporters, and of course… the funds needed for it.
Tapping into Bootstrapping Communities
Use the power of online communities for bootstrapping SaaS. This option is not so much about raising money as it is about getting help with a myriad of other challenges you can face as a SaaS founder.
There are many different ones online in places like Discord, Slack, Circle, Reddit, and more. You can join ones that talk about broad entrepreneurship topics or more niche ones focused on a particular SaaS niche, say productivity, or finance.
People in these communities are in a similar situation or already traveled part of the journey you’re embarking on and they can understand the challenges ahead.
If you join and are active, you can tap into a great network of other indie creators, bootstrappers, and founders who are working on their own ventures.
Most of them are willing to share lessons learned, offer support, and even collaborate on existing projects.
And who knows, maybe you’ll be fortunate enough and meet a potential investor that is interested in your niche, likes your product, and will fund your growing SaaS.
Leveraging Your Existing Network
There are 2 ways you can get funding with this strategy.
First is the traditional way. You reach out to the people you know and are close to. That’s the usual “Family, Friends, and Fools” trio.
The other is your extended network. (And no, I’m not talking about your coworkers. Maybe the previous ones work, the others fit in the first category.)
This extended network is all the people you have met either online or offline in groups/events/places related to startups and SaaS.
There are many people you know (or acquaintances from people you know) who can help you out in this stage, even referring you to someone else if they can’t help directly.
That network is called the “hidden goldmine” in a couple of places online. You can get started raising funds from them or even finding partnerships and doing a 50/50 split of the expenses and earnings.
This is similar to the previous strategy in which you can gather funds for your project or other equally valuable resources that will help your SaaS get off the ground.
And when you reach out to these people, do yourself a favor and don’t pitch them right from the start. Especially, if you haven’t had contact with them or it’s been a long time. No one likes to get cold messages/emails pitching them stuff from the get go.
Exploring Strategic Partnerships
Now you might be thinking that I’m repeating myself over and over. And while that might look like it's the case, it’s not entirely true.
This particular method works better when you already got started and have something built that’s getting results.
There are networks out there that you can apply to where you can get more exposure for the product or new users willing to try it.
This can come through one (or more) different ways like:
- SaaS product listings.
- Cross-promotions.
- Revenue-sharing.
- Newsletter shout-outs.
- Joint-venture campaigns.
- Paid sponsorships
- Referral programs.
Just to name a few.
These collaborative efforts can be a win-win for all the parties involved.
It’s worth mentioning that you can take part in these programs/networks or you can DIY it through cold outreach on online groups, email, or social networks.
Joining forces together, you can find others to pool resources, share costs, and grow together in a similar space or niche.
Running pre-orders or limited-time offers
This is another slightly more advanced technique to get additional funding. This time not coming from your contacts, or people in your niche but rather from your actual users.
You can deploy this technique whether you’re launching the product or it’s already launched and you’re growing it.
Examples:
“John is about to launch a SaaS that helps founders to automate their posting on social networks to drive more traffic. He runs a lifetime deal for the software at low price that would make it look like a steal. But he runs it just for 3 days.”
On the other hand…
“Nico has a SaaS that helps writers create awesome graphics to illustrate their content. He uses a date like Black Friday or Cyber Monday to run a 50% off discount for a yearly plan. Now he gets a bigger lump sum of money and users for a whole year.”
There are, of course, many variables that play a part in running those kinds of offers, those 2 examples are just to give you an idea of how it would work.
What’s important to remember is that there are different strategies that work in different stages of the product, not just the launch. And if you’re creative enough, you can pull them off regardless of if the product has 2 months or 1 year of being launched.
Doing so can create an immediate influx of cash for your SaaS while also getting a greater number of users that would probably won’t have tried the product otherwise. And it’s all part of the constant dance of getting more users while maintaining the existing ones satisfied.
Also, offering special incentives to early or new customers, like special pricing or exclusive features, you can turn regular users into fans that enjoy the product and can promote it for you.
Not to mention that you’re validating the demand with one of the most important metrics… actual money in the bank.
Conclusion
Now you have a better picture of other ways to bootstrap SaaS without going the traditional venture-funded route.
We talked about crowdfunding platforms, bootstrapping communities, your existing network, strategic partnerships, limited-time offers, and if you’re creative enough you can come up with other different ones.
An important note here is that although having enough funds to launch & grow a SaaS is important, money isn’t everything. You can still be successful in that journey when you employ other resources like time, social capital, trading your knowledge, etc.
Creativity and innovation are not only for coming up with a product idea, they also work great for finding alternative routes to propel it forward and make it a success.
Think outside the box and explore other unconventional methods to fund & grow your SaaS venture.
Thanks a lot for reading!
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