By Justin Zastrow, CEO of Smart Armor.
Back in 2013, my team and I had worked hard on a prototype for the world's first Bluetooth smart lock for controlling medication consumption. We went to every startup event, took every meeting and told our story to anyone who wanted to hear it. We were on the hunt for funding to take our idea and turn it into a reality. The problem? Nobody cared. We knew we were onto something, but sadly our network didn't. After several dead ends, I was forced to reconsider our idea. It was a total "aha" moment when I realized that we could apply a smart solution to every home and office out there. So we pivoted from medication adherence to other common daily security issues.
Coming to Terms With Bootstrapping
After we exhausted our efforts, we bootstrapped. We asked every friend and family member for initial investments. Luckily, that allowed us to finalize what we thought would be the final design, then launch a crowdfunding campaign to achieve customer validation. Bootstrapping isn't easy and it isn't for everyone. The back and forth debate between bootstrap funding and investment funding is worth paying attention to. We wanted investors and were prepared to give ownership to whoever would buy it. In the end, I am so glad that we bootstrapped (even if it wasn't by choice at first). We spent the first few years on our own and made it really far in terms of company growth all while avoiding taking other people's cash. Or in other words, we held on to as much ownership as possible.
What to Consider Before Bootstrapping
It's simple: ask yourself, "Do I need to take other people's money?" One thing I can confidently advise is that if you are able to bootstrap, do it. Keep as much ownership of your business as you can and for as long as you can. Being turned down by so many initial investors motivated us toward the best possible version of our business. Another way to make bootstrapping a possibility is to remain gainfully employed by a different company while building one for yourself. It's without a doubt a sacrifice but one that can make a huge difference in your future success. You don't need an investor to build the business plan or website. There are so many things you can do before taking someone else's cash, so do them. When you've exhausted all energy and money and are ready to scale your business, you've found yourself in a place ready to think about investors.
It's safe to say that smart home technologies are gaining a piece of the market with rising consumer interest, thus contributing to investor interest. This worked well in our favor now that we have working technology and use-cases for enterprise-level applications. The timing is right as we are now ready for funding and in the middle of preparation for a seed round. Anyone starting out needs to consider the catch-22 (especially in consumer technology); while investor interest and the many mergers/acquisitions that are happening in the smart home industry are validating the ideas and hard work, it means there is little room for trial and error. So set yourself apart from the noise and saturation that will soon be inevitable.
Justin Zastrow is CEO of Smart Armor, which links app-driven, wireless-locking technology to secure your belongings and simplify your life.