Bootstrapping has emerged as a very popular trend recently in the Valley as more entrepreneurs are bypassing Venture Capital. Here I ask Rene about the roll of boostrapping within the Incubator, and also get introduced to SmartFunded.
SM: Do you have examples of partners who have been able to bootstrap and avoid VC funding? RB: Many of the partners in the Incubator today do not have any VC funding. They are either bootstrapping or have Angel investors. They still need to prove they are viable in that model, but a fair portion of the companies in the Incubator do not have, and do not desire, VC funding. There is a company in the AppExchange network that focus on financing transactions rather than financing companies. For example, SmartFundit.com funds transactions. They allow a flex income company to fund through their first number of transactions to bootstrap.
SM: Does this mean if they have booked a one-year subscription agreement they basically finance the agreement? RB: Correct, they finance the agreements or transactions.
SM: That is great! RB: SmartFundit has done this for a number of the companies we have in the exchange, and they are a very active partner.
SM: Who is SmartFundit, are they a financing company or a bank? RB: No, they are an aggregator. They bring banks and fledgling companies together. They are an intermediary between banks an the on-demand businesses. They are based in the US and the UK, and they are very active in this space as well as in the AppExchange and the Incubator.
SM: When you are talking about teaching these companies to market or sell, one of the key things I have noticed about SalesForce.com is a fabulous telemarketing process. How are you teaching that to your Incubator companies? Do you give them access to the call center, or do you teach them about it? RB: We are doing both. Most of these companies are still doing hand to hand battle for their first few deals. They are not really ready yet for the telesales approach.
Our incubator in San Mateo has an entire floor of telesales, and we have a lot of back and forth between the incubator companies and telesales. We do guided sales, and let them sit in to see how it takes place. We help them assess if they have a product which is ready to be sold. Most of these companies are very small, so it is a hands-on process to teach them how to do this. We do have some more mature partners who are coming through this program, and they have big ideas for selling and marketing over the phone, and we allow them to partially incubate in our call center.