How To Launch A SaaS Startup Without VC Funding

Launching a startup is a very difficult thing to do, more than an aspiring entrepreneur can probably imagine. Yet, there are a lot of resources on the internet on how to do it (hire, raise funding, run ads, etc), but most of these guidelines apply only if you are a funded startup.

What happens if you want to bootstrap it?

Unfortunately, there are not many posts on this side except maybe IndieHackers and some sub-Reddits. In this post, I will share what I learned from launching a bootstrapped SaaS after working for years for a couple of funded ones.

You Must Nail A Niche Or Have A Unique Angle

The first and most important aspect is that since you won’t have VC money in your bank account to pour it into marketing so that you can relatively quickly make your brand somewhat recognizable, you absolutely have to nail a niche.

This is a term coined by Jason Lemkin of SaaStr, but what it really means is doing customer development so good, that you will know your potential customers inside out, their objections, how they get value out of your product and everything in between.

In other words, your product might be doing something that others do (like CRM for example), but for a specific group of people and in a way that has a clear benefit, which other vendors currently don’t offer.

If you are selling generic inventory management software, most businesses already have one in place, it’s very hard to switch vendors and almost impossible to switch to someone they don’t even know.

So, the first thing you have to do is talk with a lot of potential customers and try to find a way that makes your product better or that it does one thing really well and you can expand from there.

Is just that enough though?

Avoid Competitive Software Sectors

No, you also need to avoid competitive sectors. This one ties in nicely with the previous point.

Even if you find an angle or a niche that your product can provide value if the sector is highly competitive it will be very hard to break through and be heard.

Take for example the Learning Management Systems (LMS) sector or the Email Marketing sector. Both are highly competitive, with products of many features and integrations.

If you want to compete with them, you will need to provide a better product and advertise it in the sky-high CPC numbers older vendors are competing on.

When you want to enter a sector that’s competitive, it’s virtually impossible to do it without funding, so it’s best to avoid it. There are many less competitive and underserved sectors that demand your attention.

Start Locally Before Expanding

Most people want to go right in the US or UK and start promoting their product. I get it, they are one of the biggest markets on the planet, they are tech savvy and have money to spend.

But, there is one small problem: everyone tries to do it!

To make things worse, these markets already have some existing vendors or leaders in most sectors and the costs are pretty high for other countries that are outside of the US.

Here in Greece, most startups try to go as soon as possible to the UK and then the US too, but if they rush too early they just lose a ton of money. For non-funded startups, it’s almost a no-brainer to avoid it at early stages.

The best way is to start locally, in your country and ideally in your city if it’s big enough. That’s how we do it at least at Altosight. We are focusing first on Greece to get our sales ramped up, nail our pitching and improve our product.

Also, being local it’s easier because people feel closer to you, they can get more personal with a live meeting and feel they can reach you with a simple phone call. If you also speak the same language it’s an added bonus.

In fact, being local is so important that it can put you in the same room with bigger competitors than you, when companies evaluate solutions.

Start cold-calling companies in your area that could use your software and schedule that meeting!

Pitch Someone To Pay You To Develop It

Last but not least, many startups got started from founders that were consultants or freelancers first. They saw a need for some clients and tried to develop a solution that could be used by all of them. Then they turned that into a SaaS product and tried to get even more customers. That’s a safe way to go about it and if you already have clients, I suggest you try doing that.

In essence you gather three clients with the same problem, you agree on the features the solution will have and how it will work, you quote them a cost in which they get the solution forever, but the rights of the product stay with you (you will have to charge a low fee for that).

Most clients would be happy to pay you a lower fee to use the solution forever with no extra costs and you can use that money to fund your product. In order for this strategy to work, the clients will have to trust you. So existing clients is the safe bet.

In general, when starting without VC funding, you should focus on small businesses (B2B), because consumer it’s almost impossible to work without some VC funding and enterprise or big businesses take a long time to close. Better start quickly with small businesses who close faster but at lower fees.

Conclusion

I hope this post will help new and aspiring entrepreneurs on how to start a simple business that you simply try to take it to the break-even point, before anything else.

Also, I hope it will show a different way of creating a startup other than the usual funded way. There are many self-funded startups that we don’t hear about; a bootstrap way is an option too.