Fintech/Interview/ We’re bootstrapped — and it’s a great place to be right now As the fintech funding climate gets rockier, Backbase founder and CEO Jouk Pleiter explains why bootstrapping is the way to go By Amy O'Brien 3 June 2022 Jouk Pleiter Jouk Pleiter \Fintech In data: The types of payment fraud causing ‘epidemic’ losses By Sifted 4 July 2022 Fintech/Interview/ We’re bootstrapped — and it’s a great place to be right now As the fintech funding climate gets rockier, Backbase founder and CEO Jouk Pleiter explains why bootstrapping is the way to go By Amy O'Brien 3 June 2022 Backbase is an Amsterdam-based SaaS scaleup that provides legacy banks with the software they need to digitise. And almost two decades after founding, it’s still bootstrapped. As the fintech funding climate gets rockier, founder and CEO Jouk Pleiter told us in our weekly Fintech newsletter why he thinks this tactic is the way to go right now. Was your decision to bootstrap a deliberate one, or did you struggle to raise at first? I always wanted Backbase to be independent, with our customers as our primary stakeholders. It was an intentional decision to avoid venture funding. Over the years, a number of investors have approached us about investment, but we’ve consistently declined. I chose to bootstrap from the beginning based on my prior experience with startups. In my last startup, I saw how venture capital shifted the management team’s priorities away from customers and products. In the current macroeconomic environment, and with what we know about it getting harder to raise from VCs, is bootstrapping on the up? The advantages of bootstrapping are being rediscovered out of necessity now, but they’ve always been true. First, bootstrapping requires a founder to build sound unit economics from the start. We have always invested in successful projects as they scale and prove themselves, but we don’t buy billboards in Silicon Valley. Bootstrapping keeps founders from vanity projects. Second, it requires you as a founder to develop an efficient engine for testing and perfecting product-market fit. This emphasises entrepreneurship and attention to customers over unsustainable spending on customer acquisition and achieving scale without loyalty, while the product-market fit is still immature. Third, when you bootstrap, a founder can focus on where to have the most impact and not just where the largest possible total addressable market (TAM) is. Backbase has pivoted over the years, but we’ve done so based on where we can help customers in a profitable way, rather than simply chasing a massive TAM and the red ocean competition that typically accompanies it. How does bootstrapping now set you up for success further down the line? Until now, bootstrapping allowed us to have a healthy balance sheet even before Covid and the current funding environment. In this macro environment, it has given us the stability to continue our aggressive investments in new products and services knowing we aren’t exposed to the short-term thinking that comes from having a short runway. This sets us up for success further down the road by preserving independence. Instead of scrambling to extend our runway, we have the freedom to follow the path of profitable, organic growth that’s so far led us to more than $100m ARR. This interview first appeared in our Fintech newsletter — sign up now! Related Articles 22 French fintechs to watch post-Brexit By Marie Mawad in Paris Click here to read more “Everyone’s a fintech now”… or are they? Why embedded finance is harder than it looks By Tom Ritchie Click here to read more Payhawk spreads its wings as it looks to dominate enterprise spend management By Kit Gillet Click here to read more Barclays’ Megan Caywood on life after Starling and the rise of challenger banks By Isabel Woodford Click here to read more Most Read 1 \Startup Life Europe needs to catch up on pivot culture 2 Member \Deeptech 14 deeptech startups to watch in Spain and Portugal, according to investors 3 \Sustainability New €100m evergreen climate tech fund AENU launches 4 \Fintech What would a recession mean for revenue-based financing startups? 5 \Startup Life Gorillas-owned rider platform Street Fleet lays off 100+ riders and is set to shut down Join the conversation Subscribe Notify of new follow-up comments new replies to my comments
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