When Nextbigwhat published about the constructive ways of funding your startup, I was reminded that after we launched KooKoo, we had utilized almost all the means mentioned in the video. So, in this blog post, let me recount how we used the different types of money available to us to fund KooKoo.
This is the primary source of funds for us. We have a cloud telephony platform, and a couple of products, a cloud call center and a cloud PBX which have proven useful enough to businesses that they are paying us a monthly fee for using those products. From the beginning, we have run a lean process and had one eye on our expenses so that our expenses were never too much over our revenues. During the initial stages when we were building the product and doing R&D, we used the savings of the founders to fund KooKoo.
2. Friends and Family
The advantage of doing a business in India is that family will always help you out. We the founders have borrowed heavily from friends and family who just loaned us the money with out any questions(and without any interest :)). Most of the loans have now been re-payed.
At one point in our journey, in our second year of KooKoo, we needed to raise more money. So instead of going the normal route, we gave an option to the employees to buy some stock. We were surprised at the enthusiasm. Guess, people just believed in what they were building 🙂
We raised ~$75K using this means. The reasoning was simple,first internal guys should believe before outsiders believe. And in India, almost everyone has some savings or second income,so the employees were able to get some amount going thru families
After our second year, we reached out to our top 10 paying customers and gave them an offer of 20% discount if they pay yearly. 4 took the offer and 1 customer(well known in startup circles,sorry can’t disclose the name) did an Angel investment.
A couple of HNIs who are also friends with the founders have pumped in $300K as Angels.
The one segment from which we have not yet raised funds from is vendors. Though it was not because of a lack on interest, the terms just did not work out.
What has been your experience with fund raising? Have you tried creative mechanisms? Share that please!
[Reproduced from Chetan’s piece on official Kookoo blog.]